A no-claims bonus could net you a big discount on your car insurance – we explain how they work and how much you could save
For every year you have car insurance and don’t make a claim, you’ll get a discount on the following year’s premium – this is known as a no-claims bonus.
While some insurers offer discounts for up to eight years of claims-free driving, the maximum figure is generally five years.
How much discount does a no-claims bonus give?
The British Insurance Brokers’ Association says that a driver who’s gone a year without making a claim will get a discount of around 30% off their premium, while someone in their second year of driving will get around 40% off.
After five years of no claims, drivers can receive a maximum discount of around 60 or 65%.
Protecting your no-claims bonus
If you have an accident and take some or all of the responsibility, it’s likely that you’ll lose some or all your no-claims bonus. If you’re not at fault and another party takes the blame, you should get to keep your discount.
A way to safeguard your no-claims bonus is to pay an additional amount on top of your car insurance to protect it. This means that even if you were to make a claim, your no-claims bonus would stay intact. Making two claims in a year with a protected no-claims bonus won’t have an effect with some insurers, though others may significantly reduce it.
It’s worth remembering that a protected no-claims bonus won’t entirely shield you from a higher premium when you come to renew your car insurance. When calculating premiums, insurers look at the number of years without claims as well as the number of claims made.