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No claims discount explained

What’s a no claims bonus? Is it the same as a no claims discount (NCD)? Is there a limit on how long you can build one up for and how long will it last? Here’s what you need to know about NCDs.

What’s a no claims bonus? Is it the same as a no claims discount (NCD)? Is there a limit on how long you can build one up for and how long will it last? Here’s what you need to know about NCDs.

Written by
Kate Hughes
Insurance expert
Last Updated
20 OCTOBER 2023
8 min read
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What is a no claims bonus?

If you haven’t made a recent claim, you can get a no claims bonus, also known as a no claims discount (NCD), on your car insurance when you come to renew. The longer you drive without claiming, the bigger the discount on your premium could be.

To show how the discount might work, imagine that your insurance premium was £1,000 and you have a 30% no claims discount. What you’d pay is £700 – a saving of £300.

Just be aware that it’s unlikely that any no claims discount will be applied to any administration fees or add-ons you’ve chosen. You’ll be charged for these at the full rate.

Insurance providers don’t have to offer NCDs, but most do.

Is a no claim discount the same as a no claims bonus?

Yes, they’re just different names for the same thing. No claims discount is more accurate and is the term used by insurance providers.

How does a no claims bonus work?

Each insurance provider sets their own rules for how their no claims discount scheme works. But, generally, for every year you drive without claiming on your car insurance, you’ll add another year to your no claims discount.

Often numbers of years are bracketed together, and not all providers do it in the same way. For example, one provider might give the same discount to drivers with four, five and six years of no claims. Then, once you have seven years you’ll go into a higher discount bracket. Another might bracket together years five to eight with the same discount.

Discounts can be significant and the variations in bandings could make a real difference when it’s time to renew.

You might find, for example, that your insurance provider could offer a discount of 30% on your premiums if you can prove you’ve been claim-free for a year. But that could rise to a maximum worth as much as 65% or even 70% if you’ve been claim-free for nine or more years.

How can I get proof of my no claims discount?

Some insurance providers will include no claims bonus proof with details of your discount on your insurance renewal or cancellation notice. Others will send a letter with the details. Some insurance providers may not provide proof automatically and you’ll need to contact them to ask for it.

How to check my no claims bonus

The simplest way to check your no claims discount is to look at the documentation your insurance provider has given you. This might have been sent through the post or may be online, depending on how you manage your account.

Start by looking at your renewal notice or other paperwork. If you can’t find the details of your NCD, contact your provider.

What is no claims discount protection?

No claims discount protection could help you to keep at least some of your no claims discount, even if you’re forced to make a claim.

It’s a policy add-on that trades off the extra cost of protection in the short term against the long-term risk of losing the whole of your no claims discount. It could be valuable, especially if you’ve built up a big discount over the years.

Some insurance providers won’t allow you to protect your NCD if you’ve earned less than four years’ discount. But if you have the right number of years, you can protect it by paying a fee on top of the cost of your car insurance. The extra cost can vary a lot, so it’s worth shopping around.

How does NCD protection work?

With NCD protection, if you claim on your insurance, your NCD will change to whatever is set out in your policy.

Typically, you may lose a year or two of discount. For example, if you had seven years of NCD it will be reduced to six years. If you don’t have NCD protection, it might revert to just three years if there was a claim.

Some factors to bear in mind:

  • There can be real differences between providers about the impact of a claim on your NCD, both with and without NCD protection. Make sure you understand the terms before you take out any policy or opt for the protection add-on.
  • Having NCD protection doesn’t mean your premium won’t go up. You’ll still get a discount, but the premium will be more expensive to start with because of the claim.
  • It’s a good idea to do the sums and work out if your NCD is worth protecting, given your driving history and other circumstances. 

You can always play around with our car insurance quote service to see how much of a difference losing a year or two of NCD would make to your premium. But, of course, this may change by your next renewal.

What happens if I don’t protect my no claims bonus?

If you don’t protect your no claims discount and you’re forced to make a claim, you’ll lose your existing no claims discount. Whether it’s lost entirely, or just reduced, depends on:

  • The amount of discount you’ve built up
  • The number of claims you make
  • Your insurance provider.

Your policy documents will explain which claims will and won’t impact your no claims discount. For example, if the accident wasn’t your fault, your insurance provider will try to recover the costs from the driver who was at fault. In this case, your NCD might 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.

How to keep a no claims bonus without a car

Whether you can keep your no claims discount without a car will depend on how long you’ve been without car insurance. 

If you don’t drive for say a year, you may be able to keep your original NCD. But if the gap is two years or longer, it might be tricky to find a provider who’ll honour the NCD you’ve built up.

A good place to start might be your old insurance provider. While not giving you the full number of years you’ve accrued, they may be willing to offer you a smaller number of years. If you’re not happy with what they offer, it might pay to shop around.

If you know you won’t be renewing your policy for a while, make sure you keep the documentation showing how much NCD you’ve built up and who last insured you.

How long does a no claims bonus last?

A no claims bonus should last as long as you remain insured and don’t make a claim. If you switch from one car insurance provider to another, your no claims bonus should follow you, but check this with your new provider.

You should be able to keep the same number of years but be aware that the discount related to this figure may vary between providers.

The only time you need to worry about a no claims bonus expiry date is if you’re uninsured for a long period. Usually, if you’re uninsured for more than two years, you’ll probably have to sacrifice your no claims discount and start again from scratch or with fewer years NCD.

What happens to my no claims discount if I make a claim?

If you make one claim on your insurance and your insurance provider pays out, your no claims discount is typically reduced by two or three years. It could be further reduced if you make two or more claims.

So, if you have eight years of NCD and make a claim, in theory you’ll be left with five or six years. 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.

If you make a second claim, you’ll lose it all. Most insurance providers will explain what happens to no claims discount in their policy booklet, so you can check before you buy.

Will all car insurance claims affect my no claims bonus?

This will depend on your insurance provider. In your policy documents it will say if there are any instances where a claim won’t affect your discount. It might cover:

  • Repair or replacement windscreen
  • Lost keys
  • A claim under breakdown cover
  • A claim caused by an uninsured driver.

Can I bring my no claims bonus with me from another insurance provider?

Yes, you can usually take your no claims bonus with you if you switch providers. To do this, you’ll need proof of your existing NCD – usually in writing.

Your new provider is likely to ask you to provide proof within a set number of days from request or purchase. If you don’t provide proof, your policy could be cancelled and you could be charged an admin fee or asked for an additional premium.

How do I get a quote?

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Frequently asked questions

Can named drivers build up a no claims discount?

Named drivers can’t usually build up a no claims discount, although they can accumulate 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.

It’s hard to say which insurance companies will give a no claims bonus to named drivers. This is because there are so many insurance providers in the market and their policies change regularly. If this is something you’re looking for, you’ll need to shop around and compare.

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

That depends. 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 insure two cars with the same no claims discount?

No, not usually. That’s because usually the cars would be insured at different times. This means your period of no claims bonus would be different. However, if you insured multiple cars at the same time, your no claims bonus would be the same across each of them.

If you have a multi-car policy, each car is still recorded separately, meaning your no claims bonus isn’t shared between vehicles.

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 and not all treat overseas NCDs in the same way, so check with them before assuming anything.

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