No claims discount explained


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No Claims Bonus Explained

No claims discount (NCD), also known as no claims bonus– is one of those things to cherish as a driver. That’s because it has a very important role when it comes to helping to reduce your car insurance premium. 

What is No Claims Discount?

NCD is a discount that can be applied to your car insurance premium. Each year that you drive without a claim being made against your policy gives you an additional year of no claims discount.. So, the more years you have of no claims, the greater the discount on your premium could be.

How much is my No Claims Discount worth?

There are lots of factors which determine the discount you’re offered and there isn’t a standard model applied across all insurance providers. So the discount you’re offered will change depending on your circumstances and the insurance provider’s terms and conditions. However, according to the Competition and Markets Authority, typically the discount is calculated by 5% to 10% every year, so one year’s NCD would equate to 5% discount, two years 10% 3 years 20% etc... until the insurance provider’s NCD limit is reached. The NCD offered by each insurance provider will increase at different increments to their maximum NCD amount – usually up to around 60% to 65%

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

Some insurance provider will offer no more than five years but some insurance providers might allow more. Remember, just because some insurance providers will consider up to 15 years of NCD doesn’t necessarily mean your insurance will be practically free. A no claims bonus and discount offered is down to the discretion of your insurance provider.

If I claim, how is my NCD affected?

If you make an ‘at fault claim’, then typically insurance providers will deduct two years from your total number of no claims years. So, if you have accrued five years of NCD and you make a claim, you’ll lose two – leaving you with three years at your next renewal. 

Is two years always the amount deducted from NCD after a claim?

Not necessarily. You’ll need to scrutinise the small print with this one. As some insurance providers cap the maximum at five years, anything beyond this becomes irrelevant. So, if you had eight years of NCD and claimed, in theory you’d be left with six years NCD, right? Not if your insurance provider considers their limit to be five years NCD, if this is the case then in their eyes 5−2=3 and three years of NCD is what you’ll be left with.

The accident wasn’t my fault, will I still lose my NCD?

A non-fault claim is one where the insurance company makes a full recovery of their losses from a 3rd party. Examples could be if a driver hits you from behind whilst your car is stationary or if they ran a red light and collided into you. If you submit a non-fault claim, your insurance provider will try and recoup any repair or replacement costs from the other driver and your NCD should be unaffected. However an exception to this would be if the insurance company was unable to recover it’s costs...

What if no one was to blame, do I still lose my NCD?

Your claim could be termed a ‘fault claim’ if your insurance provider can’t recover costs from another party. Instances where this might occur include if your car is vandalised or damaged and the culprit can’t be caught. It might seem unfair, but you could lose your NCD.

Can I protect my No Claims Discount?

By protecting your NCD, you won't have to worry if you make a claim. It typically allows you up to two at fault claims over a three-year period without affecting your discount. It’s worth considering whether you feel it's worth it as NCD protection will usually be an optional extra at an additional cost. Interestingly, protecting your NCD will not protect your premiums from rising if you do claim. So, in terms of lowering your car insurance, it doesn’t necessarily do what you might expect.

Do all drivers of my car earn NCD?

In most cases, only the main driver or main policyholder can earn the no claims discount. However, if a named driver is on a policy with a good no claims history, some insurance providers will give them a discount if they take out their own insurance policy with them at a later date.

Can I transfer my NCD to someone else?

Sometimes you can transfer a no claims discount between spouses. But the expectation will be that your spouse or partner will have held a driving licence for the length of time it would have taken to accrue that level of discount.

How many years No Claim Discount do I have?

Some insurance providers will include the number of no claims years on your renewal or cancellation notice or 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 contact them for it yourself.

Do I still get NCD if I have a gap in my insurance?

In most cases, if the gap is over two years, then you’ll have sacrificed your no claims discount and you’ll have to start accumulating it from scratch. However, some insurance providers have extended that gap to three years. So if your lapse is borderline, check with your insurance provider.

Can I earn NCD on a company car?

You don’t earn NCD while you are driving a company car, but if you had sole use of your company car some insurance providers will take your number of claim free years in to 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 use NCD I earnt abroad?

If you’ve been abroad and you’ve gained a no claims discount, 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, but it’s always worth asking. For it to be considered you'll usually need an official company letter headed document that confirms your personal details and claims history. 

How do I move my NCD?

That depends on who your previous insurance provider was and who your new one is. That’s because each will handle the process slightly differently. You’ll be asked to prove your existing NCD which may be in your renewal notice. If it’s not, ask your existing provider for the information. Also NCD can only be used on one vehicle at a time.

Does my No Claims Discount expire?

Your confirmation letter should show the date when your policy expired because your no claims discount is usually valid for two years. So, if you’ve taken a break from driving and your last insurance policy was from four years ago, you might end up having to start building your no claims discounts all over again.

How do I compare NCD car insurance?

As you can see, there are many variables that go into calculating no claims discounts, let alone the actual cost of your car insurance policy. The only way to find out for sure what it will cost you is to compare the market. You’re in the right place. Try it today and see what you could save. 

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