No claims discount explained


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Everything you need to know about no claims discount

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

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What is a no claims discount?

Each year that you drive without a making a claim on your car insurance gives you an additional year of no claims discount, which can reduce the cost of your insurance when you come to renew it. The more years you drive without making a claim, the greater the discount on your premium could be.

What’s the maximum number of years I can accrue in no claims?

Some insurance providers won’t offer further discounts after five years of NCD has been earned, but others might allow more. The level of discount offered on your insurance is also down to the discretion of your insurance provider.

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, then your no claims discount is typically reduced by two years. So, if you had eight years of NCD and made a claim, in theory you’d be left with six years NCD. However, this isn’t always the case. If your insurance provider considers the industry standard of five years to be the maximum NCD you can have, then you’ll be left with three years NCD if you make a claim (five years minus two years for making a claim, equals three years NCD). And if you make a second claim, you will lose all your NCD.

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

If no one was to blame for the accident, insurance providers might split the cost of the claims and both drivers’ NCD could be affected. If your car is vandalised or damaged and the culprit can’t be caught, or your car is stolen, your insurance provider won’t be able to recoup its costs and your NCD may be affected.

Can I protect my no claims bonus?

Yes, by paying an extra fee on top of the cost of your car insurance. This means that if you do claim on your insurance, your NCD stays intact. Some insurance providers allow you to make two claims over a year without this affecting your discount; other providers, however, may significantly reduce your NCD if you claim twice.


Interestingly, protecting your NCD will not protect your premiums from rising if you do claim, as your claims history (among other things) is used to work out the cost of your premium.

Can named drivers build up a no claims discount?

Named drivers typically aren’t able to build up a no claims discount (although they can still build up their own no claims discount if they have a car and are insured as the main driver). Some insurance providers may give a named driver a discount, provided they take out their own insurance policy with them at a later date.

Can I transfer the NCD I earnt driving a company car?

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

Can I transfer a no claims discount I earnt abroad?

If you’ve gained a no claims bonus overseas, you may be able to transfer it when you come back to the UK. This will be down to the discretion of the insurance provider, so check with them.

Can I move my NCD if I change insurance providers?

Yes, you can usually take your no claims discount with you when your change providers – you’ll need proof of your existing NCD to do this. 

How can I get proof of my NCD?

Some insurance providers will include details of your NCD on your insurance renewal or cancellation notice, or some will send you a separate letter telling you what it is. Some insurance providers may not tell you at all and you’ll have to get in contact with them.

Will my no claims discount expire?

In most cases, if you’re uninsured for more than two years, you’ll sacrifice your no claims discount and you’ll have to start accumulating it from scratch. However, some insurance providers have extended the gap to three years, so if your lapse is borderline it’s worth checking.

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