Explaining No Claims Discount for Your Car Insurance (2024)

Your no claims discount can drastically reduce the cost of your car insurance, but drivers are often confused about how it works, especially if you're a new driver, if you've been a named driver on another policy, or you're switching insurers.

We’ll try to answer your questions here, but please get in touch if you would like more information.

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What is a no claims bonus?
How much discount will I get?
I don't have any no claims bonus - how can I get cheaper car insurance?
I’ve been a named driver on my parents’ policy until now. Can I get a no claims bonus?
No claims bonus for second drivers
I’ve just changed my car– will I have to start earning a no claims bonus from scratch again?
I’ve bought a second car– can Iapply my no claims bonus to both cars?
What happens to my no claim bonus when I change my insurance company?
Will I lose my no claim bonus if I make a claim?
Protecting your no claim bonus
How long before you can protect your no claims bonus?
Is it worth paying to protect your no claims bonus?
How long does a no claims bonuslast?
How do I get proof of no claims bonus?
Can you transfer a no claims bonus from bike to car

What is a No Claims Discount?

A no claims discount (also called a no claims bonus), is adiscount that's applied to your car insurance premium to recognise that you've been claim-free for the last 12 months. It’s calculated and applied each year when you renewyour policy, or at the start of a new policy. Careful drivers are a lower risk to the insurance company, so the discount makes theirannual premium much more affordable.

How much discount will you get?

All insurance companies have their own no claims discount scale, but a typical example might be:

30% discount after 1 year’s claim-free insurance
40% discount after 2 years
50% discount after 3 years
60% discount after 4 years
65% discount for 5 years or more claim-free insurance.

I don't have ano claims bonus - how can I get cheaper car insurance?

You can still take steps to reduce the cost of your insurance, even without a no claims discount.

Choose a car in a low insurance group
Volunteer to pay a higher excess
Add a more experienced, named driver to your policy
Fit an approved immobiliser or alarm
Keep your mileage as low as possible
Don't do any car mods
Keep your licence free of convictions
Take the Pass Plus driving course

Get a quote for cheaper car insurance

You’ve been a named driver on yourparents’ policy until now. Can youget a no claims discount?

If you've been a named driver on someone else's policy for a while, you probably don't have a no claims discount in your own name. Fortunately,some insurersoffer an introductorydiscount for named drivers. However, the discountmay be lower than the discountgiven to driverswho already have apolicy in their own name. Theremay also be restrictions on the minimum age for giving an introductory no claims discount.

Getthe maximum benefit from your good driving, bygetting insurance in your own name as soon as possible. You can make significant savings after just one year if you’ve had no claims.

No claims bonus for second drivers

A no claims bonus is usually only given to the policyholder themselves, so second drivers, also called "named drivers", don't usually earn their own bonus unless they are also the main driver on another policy. Here's a couple of examples.

A husband and wife each have their own car and insurance, but are also named drivers on each other's car insurance. They can only earn ano claims bonus from their own policy.
A husband and wifeshare one car. The insurance is taken out in the husband's name, as he uses the car most often, but his wife is also a named driver. The no claims bonus will be earned by the husband;his wife will have none.

The exception to this is that some insurers run special schemes that permit named drivers to earn their own discount. They canusethisat a later date if they take out their own policy, but this is usually only the case if you stay with the same insurer.

I’ve just changed my car – will I have to start earning a no claims discount from scratch again?

No. Your no claims discount is earned by you, the policyholder. It doesn’t affect your discount if you change the car that’s insured on your policy.

I’ve bought a second car – can Iapply my no claims bonus to both cars?

Unfortunately not. Even though a no claim bonus is earned by the policyholder, you can only apply it to one car at a time. Most times, you’ll have to start earning a new NCB on each additional vehicle you insure, but some insurers may allow you an “introductory” or “second car” discount if you mention it to them.

What happens to my no claim bonus when I change my insurance company?

This isn’t usually a problem. You simply need to ask your old insurance company to supply you (or your new insurer) with proof of your no claims discount (e.g. 3 years, or 4 years). The annual renewal letter from your old insurer may serve as proof of your no claim discount, or you may have to ask them to send specific proof in a separate letter.

There is usually a time limit for you to provide your new insurance company with proof of your no claim bonus (for example 7, 14 or 21 days). If you fail to do so within the time limit, your new policy could be cancelled. This would leaveyou uninsured, which is illegal. If the insurerdoesn't cancel the policy, they'll probably charge you the pre-discount premium in full.

Providing proof of your no claims discount is usually quite simple, however; once it is received, your insurance company will apply the correct discount to your premium.

Will I lose my no claim bonus if I make a claim?

It depends. If your insurance company can recoup any expenses from paying out on a claim, then you won't lose your no claims bonus. This often comes down to who, if anyone, was at fault if oyu're involved in an accident.

For example, if another driver crashes into you and it’s undeniably their fault, your insurance company may be able to recover the cost of repairing your car from the other driver’s insurance company.

If that happens, you won’t lose any of your no claim bonus.

But if you make a claim where you are at fault, or your insurance company can’t recover their losses because no one else was involved, or the responsible third party can't be traced, your no claim bonus will be affected.

Your discount usually “steps back” by two years for each claim. So, for example, a three year bonus would reduce to one at your next renewal. If you made another “at-fault” claim, the resulting step-back would result in you losing your no claim bonus altogether.

Protecting your no claim bonus

Once you’ve built up a few years' no claim bonus, you can “protect” it with an optional extra fee. This means your no claim bonus will be safe-guarded, even if you make an at-fault claim.

How long before you can protect your no claims bonus?

Each insurer will have their own rules. It's common for many insurers to require fiveyears claim-free driving before you can protect your bonus, but others may ask for just three. Check with your own insurance company.

Insurers vary in their rules for protected no claims bonuses. For example, some will allow you two claims in five years, but others have lower limits, for exampletwo claims in three years. Check the rules with your own insurer.

Remember that a protected no claims discount won't guarantee that your annual premiumwon't increase, only that the discount on your annualpremium is protected.

Here's an example of how your protected no claims discount works with an increase in the annual premium:

Your insurance costs £1,000 in the first year but is reduced to £400 after applying a 60% protected no claims discount.You make an at fault claim that year. The following year, your annual premium may rise to £1,100 owing to normal cost rises, but your 60% discount is protected following your claim, and so your premium for that year is £440.

Normally, the discountwould drop back two steps(e.g. to 40%) after a claim, which means that your premium in the second yearwould have been £660 without the protected NCB.

Is it worth paying to protect your no claims bonus?

The payment for protecting your no claim bonus is usually less than the discount you’d lose if your no claims discountstepped-back by two years. This makes it worthhaving, but do your own calculations to be sure. If you have a run of several years without making a claim, but pay for protected no claims bonus, the saving diminishes a little, but the sums are still likely to add up in favour of having it.

How long does a no claims discount last?

Your proof of NCB will usually only be valid for two years, although this will depend on the insurer. So if you are planning on taking a break from driving for more than two years, you might have to start from scratch with your next car insurance.

How do I get proof of no claims bonus?

When switching to a new car insurance company, your new provider will often request proof of your existing no claims discount. Youneed to get this from your previous insurer.

Each company handles the process in a different way. They may include it in your policy renewal or cancellation letter, or you may need to specifically request one. The document itself could take the form of a printed letter, certificate or an email attachment.

There may be a time limit on sending proof to your new insurer which could be anywhere from 7 to 21 days. If you don’t provide it in time your policy could be cancelled, or you might be asked to pay the full premium without any discount.

Can you transfer a no claims discount from bike to car?

Many insurers will happily accept your bike or moped discount as long as it isn’t being used on an active policy. Transferring is especially important for young drivers who started on two-wheels but have changed to a car and want their experience acknowledged.

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