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What is a no claims bonus?

March 14, 2023 by

Wondering what a no-claims bonus is? Wonder no more

A no-claims bonus, often shortened to NCB, and sometimes also (arguably more accurately) referred to as a no-claims discount, is perhaps one of the more self-explanatory bits of terminology surrounding car insurance – it needs less interpretation than third-party, GAP, or black-box insurance, for example – but it’s definitely worth knowing the ins and outs of how an NCB works.

No claims bonus meaning

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 next year.

How does a no claims bonus work?

Every year you have an active car insurance policy and don’t make a claim, you build up a year’s worth of NCB, and the more years of NCB you have, the greater the discount you should get when premiums are calculated.

If you do need to make a claim you will lose all the NCB you’ve built up, meaning you won’t get the associated discount – although you can protect your NCB – see below.

The good thing about no-claims bonuses is that while they may not involve first-class travel to a far-flung luxury resort, they are universal, so can be transferred between different insurance companies. This means that if you’ve built up five year’s worth of NCB with insurer A and they put their prices up significantly, you can ask insurer A for proof of your no-claims bonus, which you can then take to insurer B, who is offering you a cheaper policy.

A long NCB can bring car insurance costs down significantly. A year’s worth of NCB might get you a 5% discount, and will increase each year, getting you a discount of up to 60% on your car insurance premiums if you have a really long NCB.

You don’t have to have proof of NCB when you take out a policy with a new insurer – they will take your word for it when calculating your premium – but you may well have to send them proof at a later date, with your policy being cancelled or increasing in price if you cannot do so.

Most insurers have a maximum length of no-claims bonus, too: so one insurer might stop applying discounts for any year’s NCB after the fifth year; for another the maximum NCB they might offer is capped at 10 years.

Do also note that you can’t build up an NCB if you’re a named driver on another person’s policy – you have to be the main insuree to accrue NCB.

How do I find my no claims bonus?

An NCB is down to you to manage: you will need to know how much you have built up when talking to a new insurer. If you don’t know, simply get in touch with your insurer, although if you’ve changed provider a fair bit over the years you’ll need to speak to each company in turn to find out what NCB you accrued and ask them to send you proof of what you have built up.

Should I protect my no claims bonus?

If there’s one thing insurance companies like, it’s an add-on, and one thing you can pay extra for is a protected no-claims bonus.

This means that if you need to make a claim on your insurance policy, you won’t lose your NCB and it will remain in place. Protecting your NCB can allow up to two or three claims in as many years, and can be worth considering if you have built up a chunky no-claims bonus.

Do bear in mind, though, that when you take out a new policy, insurers tend to ask if you have been involved in an accident in recent years, so if your claim followed a collision you will need to declare this regardless of whether your NCB is protected.

If you have NCB protection and make a claim you are unlikely to build up any extra NCB for the year in which the claim is made, though.

Do I lose my no claims bonus if I make a claim?

Many insurance companies will insure your car’s windscreen separately from the rest of the car, so if you need a new or repaired windscreen following a stone chip, for example, claiming this against your insurance may not affect your main NCB; same goes for some add-ons like lost key cover.

If you are involved in a collision that was not your fault and your insurer is about to recoup costs from the at-fault party’s insurer, you may be able to keep your NCB, too.

No claims bonus FAQs

Does a no claims bonus expire?

Yes, unfortunately so. If you have not insured a car for two or more years, any NCB you built up previously is likely to expire.

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

Nope: named drivers do not build up no-claims bonuses.

Can you use a no claims bonus on two cars?

Negative: you can only use an NCB on one car at a time – although you can build up two separate NCBs if you have two vehicles you insure.

How do I get proof of a no claims bonus?

As your insurance company, being prepared to contact past insurers as well if you need to – it’s as simple as that.

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

Yep, although you will need to be able to show evidence of the NCB you have built up.

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