No claims discount explained

A no claims discount (NCD), also known as a no claims bonus, can go a long way towards cutting the cost of your car insurance. Here’s how it works.

A no claims discount (NCD), also known as a no claims bonus, can go a long way towards cutting the cost of your car insurance. Here’s how it works.

Daniel Hutson
From the Motor team
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Posted 29 OCTOBER 2019

What is a no claims discount?

Every year you drive without claiming on your car insurance gives you an extra year of no claims discount. This could reduce the cost of your insurance when you come to renew. The longer you drive without claiming, the bigger the discount on your premium could be.

How long can I keep accruing a bonus?

That’s at your insurance provider’s discretion. Some won’t offer more discounts beyond five years, but others allow more.

How is my no claims discount affected if I make a claim?

If you make a claim on your insurance and your insurance provider pays out, your no claims discount is typically reduced by two years.   

So, if you have eight years of NCD and make a claim, in theory you’ll be left with six years’ NCD. But this isn’t always the case. If your insurance provider considers the industry standard of five years to be the maximum NCD, you’ll be left with three years’ NCD. And if you make a second claim, you’ll lose it all.  

If the accident wasn’t your fault, your insurance provider will try to recover the costs from the driver who was at fault. In which case, your NCD should be unaffected.  

If no one was to blame for the accident, insurance providers may split the cost of the claims and both drivers’ NCD could be affected.  

If your car is stolen, vandalised or damaged and they can’t catch the culprit, your insurance provider won’t be able to recoup its costs. That means your NCD will likely be affected.

Can I protect my no claims bonus?

Yes, by paying a fee on top of the cost of your car insurance. That way if you do claim on your insurance, your NCD stays intact.  

Some insurance providers allow you to make two claims in a year without it affecting your discount. But other insurance providers may significantly cut your NCD if you claim twice.

If you do claim, protecting your NCD may not actually stop your premium rising, as insurance providers consider your claims history when working out the cost of your premium. 

Can named drivers build up a no claims discount?

Named drivers can’t usually build up a no claims discount. Although they can build their own if they’re insured as the main driver on their own car. Some insurance providers may give a named driver a discount – provided they take out their own policy at a later date.

Can I transfer the no claims discount I earned driving a company car?

If you had sole use of your company car, some insurance providers will take into account your claim-free years and offer an equivalent discount. Your company car insurance provider should be able to confirm that you had sole use of the car for social, domestic and pleasure purposes, as well as for business use, along with how many years of claim-free driving you have.

Can I transfer a no claims discount I earned abroad?

If you’ve built up a no claims bonus overseas, you may be able to transfer it when you return to the UK. This is down to the insurance provider’s discretion, so check with them.

Can I keep my no claims bonus if I switch insurance providers?

Yes, you can usually take your no claims bonus with you if you move. To do so, you’ll need proof of your existing NCD.

How can I get proof of my no claims discount?

Some insurance providers will include details of your no claims discount on your insurance renewal or cancellation notice. Others will send a letter with the details. Some insurance providers may not tell you at all and you’ll have to contact them.

Does my no claims discount expire?

If you’re uninsured for more than two years, you’ll probably have to sacrifice your no claims discount and start again from scratch. But some insurance providers have extended the gap to three years, so it’s worth checking.

How do I get a quote?

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