What is a no claims bonus?

A no claims bonus (NCB), also known as a no claims discount (NCD), is when your insurer gives you a price reduction on your car insurance for each year you manage to avoid making a claim or being in an accident where you were at fault.

This guide will help you better understand what a no claims discount is and how it can help reduce the amount you pay on your car insurance.

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The meaning of a no claims bonus

A no claims bonus is a reward given to you by an insurance company if you make no claims on your policy in a year. We use the word ‘bonus’ but it’s not actually a bonus – your insurer won’t bung you £10k and a trip to the Maldives – they’ll just reduce the price of your car insurance the following year.

How does a no claims bonus work?

Every year you hold a car insurance policy, you earn a year of no claims bonus. More years mean a bigger discount on your premium. If you make a claim, you usually lose your NCB and the discount that comes with it, unless you’ve paid to protect it.

NCB is transferable between insurers. For example, if you’ve built up five years with insurer A and switch to insurer B for a better price, you can request proof of your NCB and use it with the new insurer.

A single year of NCB might save you around 5%, rising annually up to roughly 60% with a long history. You don’t need proof immediately when taking out a new policy, but you may be asked for it later – your price could increase or your policy could be cancelled if you can’t provide it.

It’s worth noting too that insurers often cap the number of years they’ll reward, coming between five and 10 years. And finally, only the main policyholder can earn NCB; named drivers cannot.

How do I find my no claims bonus?

You can find out your no claims bonus by contacting your insurer. They can tell you how many years you’ve built up and give you proof.

If you’ve switched insurers several times, you may need to contact each previous insurer to confirm the NCB you held with them and ask for proof of each period.

Bear in mind that your NCB isn’t tracked centrally, so it’s up to you to keep records when you change your insurance provider.

Should I protect my no claims bonus?

Protecting your NCB can be worthwhile if you’ve built up several years of discount. With NCB protection, you can make one or more claims (usually up to two or three) without losing your bonus.

Do bear in mind, though, that even with protection, you must still declare accidents when applying for a new policy. You also usually won’t earn additional NCB for the year in which a claim is made.

So, if your NCB is substantial and you want to safeguard it against occasional claims, paying extra for protection can be a sensible choice. Protecting your NCB roughly costs an additional £20-60 per year.

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

In most cases, if you make a claim – or someone claims against your policy and your insurer has to pay out – you’ll lose some or all of your no claims discount at renewal. This can happen even if the incident wasn’t your fault. For example, some insurers reduce your NCD for claims caused by vandalism as they’ve still had to pay out.

But not all claims affect your NCD. Many insurers treat windscreen or glass claims separately, so these usually don’t reduce your discount. Similarly, if you’re involved in a collision that wasn’t your fault and your insurer can recover the costs from the responsible party, you may keep your NCD.

Remember that rules vary between insurers, so it’s important to check how NCD is handled before buying a policy.

No claims bonus FAQs

Does a no claims bonus expire?

Yes, a NCB usually expires if you don’t have car insurance for more than two years. You keep building it as long as you have an active policy and don’t make a claim, but it won’t grow automatically through temporary or short-term cover.

Can you get a no claims bonus as a named driver?

No, the NCB can only be accrued by the main policyholder.

Can you use a no claims bonus on multiple cars?

No, you can only use a no claims bonus on one car at a time. NCB is earned per vehicle and per policy, so each car needs its own claim-free history to build a discount. If you insure two cars, you can build two separate NCBs, but you cannot apply the same bonus to both cars simultaneously.

How do I get proof of a no claims bonus?

You can get proof of an NCB from your current or previous insurer’s policy documents (renewal or cancellation letters), by contacting your insurer, or by downloading it from your online insurance account.

Can I transfer my no claims bonus to a new car insurer?

Yes, but you will need to be able to show evidence of the NCB you’ve built up.

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