What Is a No-Claims Bonus, and Is It Worth Protecting?
FixMyCar explains how a no-claims bonus works and whether you should pay to protect it.
Book a car repair nowEllie Dyer-Brown
Wednesday October 02 2024
7 min read
A no-claims bonus gives you a discount on your next insurance policy based on how many years you’ve gone without claiming. It’s an excellent way to get cheaper car insurance, but if you make a claim, you could lose the discount you’ve built up. This guide explores how a no-claims bonus works and whether it’s worth protecting.
What is a no-claims bonus?
When you apply for insurance, the insurer will look at your claims history to determine whether you've claimed on previous policies, including those from other providers. You'll get a no-claims bonus if you haven't made any claims.
A no-claims bonus (sometimes called a no-claims discount, NCB or NCD) is a discount on how much you pay for your car insurance. It's a way for insurance companies to reward drivers for not making a claim. And who doesn't love being rewarded?
The great news is that you can build up your no-claims bonus. The more years you go without claiming, the bigger the discount you'll get on future policies.
Insurers don't publicly state how much of a discount they give drivers with no claims. However, if you have many years of NCD, you can get up to 70% off from some insurers.
| Years of no-claims bonus | Average insurance price |
|---|---|
| 0 | £1,257.47 |
| 1 | £1,006.66 |
| 2 | £858.47 |
| 3 | £737.75 |
| 4 | £677.14 |
| 5 | £658.33 |
| 10 | £440.64 |
| 15 | £422.13 |
Data in the above table is based on the median annual price of comprehensive policies sold through MoneySuperMarket in August 2024.
How does a no-claims bonus work?
You'll get an extra year of NCD each year you don't make a claim. A provider might give you a 30% discount for not claiming in your first year and an additional 10% for every year of no claims after that.
The less you claim, the more profitable of a customer you are for your insurance company. That's why insurers reward drivers who don't make claims. It's a win-win situation - they don't have to pay out, and you get cheaper insurance.
Building up a big no-claims bonus is one of the most effective ways to lower the cost of your insurance. Find out other ways to get it cheaper.
What is no-claims bonus protection?
No-claims bonus protection is an optional add-on for your car insurance. It allows you to make one or more claims a year without losing your NCB. You have to pay for it, and the number of claims allowed varies between providers.
Important: Unfortunately, having NCB protection won’t stop your insurance price from increasing.
Although it allows you to keep your no-claims record, insurers will still look at any claims you've made and decide whether you're likely to claim again. If they think you are, they will increase your insurance premium before applying the no-claims discount.
Imagine your insurance premium should cost £600, but you've secured a 50% discount by not claiming. This means you're actually paying £300.
However, you have to make a claim. Your NCB is safe because you paid to protect it, but your insurer decides your renewal price will now be £800 rather than £600. With the 50% discount, you end up paying £400. Your insurance premium has increased, even though you still got your 50% no-claims bonus.
Is no-claims protection worth it?
No-claims bonus protection could offer peace of mind if you’ve built up an extensive discount over the years and don’t want to risk losing it. This is especially true if you know your insurance would be expensive without it.
However, protecting your NCB is essentially like taking out insurance on top of your insurance. There’s no way of knowing whether you’ll need to make a claim.
How much could I save by building up a no-claims bonus?
Insurers set their own rules for no-claims bonuses. Typically, they give discounts between 5% and 70%. Data from MoneySuperMarket shows that, in the first half of 2023, drivers with a five-year no-claims bonus pay around 41% less for their insurance than drivers with no years of no-claims.
Will making a claim on my car insurance affect my no-claims bonus?
If you’re in a road accident and claim on your insurance, it’ll usually reduce your no-claims bonus by several years if the claim is successful, or you might lose it completely.
There might be circumstances where you can claim without losing your NCB - it depends on your insurer.
What if the accident wasn’t my fault?
If you can prove the accident wasn’t your fault, the other driver’s insurance company will pay out, which means you won’t usually lose your discount.
However, if your insurer does have to pay out, you might lose some or all of your NCB. This could be because:
The other driver is uninsured
You’re partially at fault for the accident
The no-fault accident didn’t involve other drivers
How long does a no-claims bonus last?
Your no-claims bonus will last as long as you drive without making a claim. However, there is a maximum number of years you can increase your discount, which varies between insurance providers.
There are two ways you can lose your no-claims policy.
If you make a claim.
If you have a significant gap between policies (e.g. you take a break from driving).
Your discount will usually expire after two years if you don't take out another policy.
How can I get proof of my no-claims bonus?
You can find proof of your NCB on the renewal or cancellation document of your last insurance policy. Insurers will access this information using an online database, but they may still ask for proof.
If you can’t find your renewal notice or cancellation letter, ask your current or former insurance provider to confirm your no-claims bonus in a written statement.
Frequently asked questions
Most insurers will honour any no-claims discount you previously earned as long as the date your last policy ended is within two years of the next one starting. However, the exact time you can keep your NCB while uninsured varies between providers.
If you don’t have car insurance for over two years, your NCB will likely revert to zero.
You can keep your NCB when you get a new car or switch to a new insurance provider. This is ideal since shopping around is the best way to find a good insurance deal.
You usually can’t use your no-claims bonus on multiple cars, even if you have a multi-car policy. Each vehicle on the policy has its own bonus, which can’t be transferred.
With most insurers, nine years is the maximum NCB. After that, your discounts won’t increase any further.
Some providers will allow you to build up a no-claims bonus if you are a named driver, but most won't. However, if you later take out your own policy with the same insurer, they may give you a discount.
Your premium can still increase even with a no-claims discount due to external and economic factors.
Looking for affordable car repairs or maintenance? FixMyCar can help.
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