When it comes to arranging Car Insurance quotes, some terms and phrases in the policy wording may not be clear. To help demystify the process, we’re answering your commonly asked questions on the subject of no claims discount, also known as ‘no claims bonus’ and ‘NCD’.
What is no claim bonus?
It’s a discount offered by insurance companies to drivers who don’t make claims on their Car Insurance. This incentive rewards careful driving, because the longer you go without making a claim, the larger the discount becomes.
The bonus is typically applied when renewing a policy, making it a valuable way to reduce costs. You can normally transfer your bonus if you switch providers, as long as you can provide proof. However, it’s worth noting that making a claim could reduce or eliminate your no claims bonus (NCB), depending on the circumstances.
Some policies offer protection for your no claims bonus, which means your discount is preserved even if you need to make a claim. This option can be beneficial for drivers who have built up a significant NCB.
How does no claims bonus work?
When you complete a year of insurance without making a claim, your insurer will apply a discount to your renewal premium. Each consecutive claim-free year increases the discount, up to a maximum set by the insurer.
The discount reduces the cost of your premium. The actual percentage varies between insurers but can result in significant savings over time.
If you make a claim, some or all of your no claims bonus may be lost, depending on the severity of the claim and your policy terms. For example, a single claim might reduce your NCB by 2 years, while multiple claims could completely wipe it out.
To avoid this situation, many insurers provide an option to protect your no claims bonus. This allows you to keep your discount even after making a claim, though limits often apply to the number of claims you can make within a given period.
If you change insurers, your NCB can usually be transferred, provided you have proof, such as a letter from your previous insurer.
How long does no claims bonus last?
It depends on the insurer. Typically, an NCB will remain active for up to 2 years after your Car Insurance policy ends. If you stop driving or take a break from owning a vehicle, you can often retain your bonus for that period.
However, if you go beyond this timeframe without an active insurance policy, your NCB may expire, and you would need to start building it again from scratch. Always check the specifics in your insurer’s wording.
How do I find my no claims bonus?
Start by checking your renewal documents or policy schedule, where your insurer will typically state the number of years you’ve accumulated. If you don’t have these to hand, a quick call or email to your insurer can provide the confirmation you need.
It’s also worth looking through any emails or letters from your insurer, as the information might already be there.
How to prove no claims discount
Proving your no claims discount is a straightforward process that ensures you benefit from the savings it offers. Start by requesting proof from your previous insurer. Many provide this automatically when your policy ends, either as part of a renewal letter or a separate document. If it’s not sent to you, give your insurer a quick call or email.
Double-check that the document includes all the necessary details, such as your name, policy number and the number of claim-free years. Providing accurate and valid proof helps avoid delays and ensures your discount is applied smoothly, keeping your premiums as low as possible.
Is 9 years the maximum no claims bonus?
While many insurers set the maximum no claims bonus (NCB) at 9 years, it isn’t a universal rule. Some providers cap their discount at 5 or 7 years, while others offer incremental benefits for 10 or more years of claim-free driving.
Each insurer determines how their NCB system works, so it’s worth checking with your provider to understand their policy. If you’ve accumulated more than their stated maximum, those extra years may still count as evidence of a strong claims history, which could benefit you when applying for new policies or negotiating premiums.
Is no claims protection worth it?
Whether no claims protection is worth it depends on your circumstances. It can offer peace of mind by allowing you to make a limited number of claims without losing your no claims bonus (NCB). However, it’s important to weigh the benefits against the cost.
No claims protection can be valuable if you’ve built up several years of NCB and want to avoid losing the discount after an accident or incident. It can save you money in the long term, especially if the cost of repairing your vehicle would otherwise result in higher premiums due to a reduced or lost bonus.
That said, protecting your NCB doesn’t mean your premium won’t rise after a claim. Insurers may still adjust your premium based on your risk profile, even if your NCB remains intact. The cost of adding protection to your policy can also vary, so it’s worth comparing the expense against the potential savings.
How to keep no claims bonus without a car
If you’re taking a break from driving or no longer own a car, it is possible to keep your no claims bonus (NCB) active for a certain period.
1. Check the validity period: Most insurers allow you to retain your NCB for up to 2 years without an active policy. This means you can take a break and still use your bonus when you return to driving, as long as it’s within the allowed timeframe.
2. Consider temporary or specialist insurance: If you think you’ll be without a car for more than 2 years, look into short-term or specialist insurance policies. These can help keep your bonus intact, even if you don’t need long-term cover.
3. Request proof of NCB: Before cancelling your policy, ask your insurer for a formal proof of your NCB.
4. Transfer NCB to a named driver policy: Some insurers allow you to use your NCB on a policy where you are a named driver, although this isn’t always possible. Check with the provider to see if this option applies.
Can you use no claims discount on 2 cars?
No. NCD is usually tied to a single policy and reflects the claim-free driving history of one vehicle. However, there are ways to insure 2 cars without losing out entirely.
If purchased an additional vehicle, some insurers will offer what is known as “Mirrored No Claims Discount”. This will give a reduction in the premium, based on the fact that you have another vehicle with no claims discount on it. This is subject to meeting the insurer criteria.
Another option is a multi-car policy, which allows you to insure multiple vehicles under one plan. While each car will have its own premium, insurers often provide a discount for adding additional vehicles. Some may even extend the benefits of your existing NCD across the policy.
If you prefer to keep the cars on separate policies, you’ll need to start building a new NCD for the second vehicle. While your existing discount can’t be applied, some insurers offer an introductory discount for experienced drivers to help offset the initial cost.
Want to find out how your No Claims Bonus affects your premium?
Speak to our friendly, UK-based Motor Insurance team to discuss your needs and arrange a quotation.
