What is a No Claims Bonus and how does it work? (2023)

Written by Zego

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A No Claims Bonus (NCB), also called a No Claims Discount, is an important thing in the world of motor insurance. It rewards you for safe and careful driving, and it can have a direct impact on the cost of your insurance.

The concept of an NCB is fairly simple – for every year you drive without making a claim on your insurance, you accumulate a year's worth of bonus. It's the insurance industry's way of saying thanks for driving safely.

How does the No Claims Bonus work?

Your No Claims Bonus (NCB) starts building with each claim-free year. The longer you drive without making a claim, the bigger your discount. Although the exact percentage varies from insurer to insurer, a typical reduction could be as much as 30% for one claim-free year, rising to over 50% for multiple claim-free years.

For example, if you've been driving for four years and haven't made a claim on your car insurance during that time, you'll have accrued four years' worth of NCB. This accrued NCB can usually be transferred between insurers, allowing you to benefit from the discounts even when you switch insurance provider.

Does a No Claims Bonus matter?

Yes, a No Claims Bonus (NCB) does matter when it comes to your car insurance costs. It's a reward system for driving safely and not making a claim, which means potential discounts on future insurance policies.

It’s good to know that, if you need to make a claim, you may lose your accumulated bonus (unless you've protected it with something like a No Claims Discount Protection add-on).

Protecting your No Claims Discount

Some insurers offer what's known as protected discount policies. These policies allow you to make a certain number of claims over a specific time period, without affecting your No Claims Discount.

For example, with a protected discount policy, you may be able to make two claims over a three to five-year period. However, it's important to know that making a claim on a protected discount policy might still affect the price of your insurance or your excess (that’s the first part of any claim you have to pay).

What happens to your No Claims Bonus if you make a claim?

If you make a claim under your car insurance policy, you will usually lose some (or all) of your NCB. However, the reduction in your NCB will depend on the nature of the claim and your current NCB level. For instance, if you make one claim during your insurance period, you'll typically lose two years of the bonus.

Can a No Claims Bonus expire?

Yes, an NCB can expire. If you stop driving for more than two years, your NCB will usually lapse, which means insurers won’t be able to use it to give you discounts. So you'll have to start accruing a new one when you begin driving again.

How can you prove your no claims history?

When switching insurers, you will usually need to provide proof of your NCB to carry your discount over to your new policy. This proof usually takes the form of an NCB certificate, or a renewal letter from your current insurer.

No Claims Bonuses: Now you know!

In summary, a No Claims Bonus is a reward feature that recognises safe driving – it gives you a discount on your insurance when you drive without making a claim. It's a valuable part of your policy, and one that's worth protecting. So, drive safely, build those claim-free years, and enjoy the savings when you renew.

Remember, the rules around NCBs can vary from insurer to insurer, so it's always worth checking the specifics with your provider. And don’t forget to shop around at renewal time to make sure you're getting the most value from your hard-earned No Claims Bonus.

Frequently asked questions

Can I protect my No Claims Bonus?

Yes, many insurance providers offer NCB protection. This add-on feature allows you to make a certain number of claims over the course of your policy without losing your NCB. However, it’s good to know that making a claim on a protected NCB can still affect your premium price or excess.

What impact does making a claim have on my No Claims Bonus?

Making a claim on your car insurance policy usually means a reduction, or complete loss of your NCB discount. The exact impact will depend on the type of claim you make, and your current NCB level. In many cases, one claim during your insurance period may lead to a loss of two years' worth of NCB.

Is a No Claims Bonus transferable?

Yes, your NCB can usually be transferred between insurers. If you decide to switch your insurance provider, any NCB you’ve built up can usually be moved to your new policy. But switching before a 12-month policy ends might mean you don't earn an NCB for that year – that’s because NCB proof is usually provided at renewal.

Does a No Claims Bonus make a big difference?

A No Claims Bonus can definitely make a big difference to the cost of your car insurance. Especially once you’ve built up a No Claims Bonus of five years or more without making a claim – the savings at renewal can be significant. But don’t forget, your bonus could be lost if you make a claim at any point, even if the accident wasn’t your fault.

Does a No Claims Bonus reduce insurance?

Yes, an NCB can certainly reduce the cost of your car insurance. The more claim-free years you accumulate, the larger the potential discount. It's an incentive for safe, responsible driving, rewarding policyholders with significant savings over time.

What makes you lose a No Claims Bonus?

You could lose your No Claims Bonus if you make a claim on your insurance, even if the accident wasn't your fault. An example could be being hit by an uninsured driver, or having your car stolen. In such cases, you could lose your NCB, and your insurance premium could go up at the next renewal.

Do insurers check No Claims Bonus?

Yes, insurers will check your proof of No Claims Bonus before applying any discount to your policy. When you switch providers, your new insurer will usually ask your old provider for proof of your NCB (or you may need to request it from them yourself). Once your new insurer has approved your proof of NCB, they’ll apply your discount to your new policy, and you’ll be able to continue building your NCB from there.

Is nine years the maximum No Claims Bonus?

There isn't a standard maximum period for a No Claims Bonus. Some insurance providers cap it at five years, while others may allow up to nine years or more. The more years you have on your NCB, the better your discount when you renew or switch insurer.

What is the potential reduction in insurance after two years of no claims?

Different insurance providers offer different discounts for a No Claims Bonus. As an example, after two years of maintaining claim-free insurance, you might get a discount of around 30-40% on your renewal. But these percentages are not standard across all insurers, so it’s always good to check before you decide who to insure with.

How much can a one-year No Claims Bonus reduce insurance costs?

The potential discount for a No Claims Bonus of one year can vary between insurance providers. Some insurers may offer you a discount of up to 30% after just one year. And others may offer you a discount of 50% or more after five years or claim-free driving. But these figures can differ based on lots of things, including the specifics of your policy, your details and your driving history. That’s why it’s always a good idea to get a few quotes and check all of the details before you buy your car insurance.

What could be the possible reduction in insurance with a four-year No Claims Bonus?

The potential reduction in your car insurance costs after four years of claim-free driving is likely to be different between insurers. Some insurers offer really good discounts of around 30% after just one year of NCB, while others will offer the best discounts after five years or more. In any case, it’s always good to shop around to make sure you get the best deal for you.