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No claims bonus explained: How to protect a no claims discount

A no claims bonus could net you a big reduction on your car insurance – read on to find out how no claims discounts work and how much you could save.

Car insurance for drivers with non-fault claims

How does a no claims bonus work? 

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 (NCB) or no claims discount (NCD). These days, insurers usually call it a discount, not a bonus.

The more years you drive without claiming, the greater the reduction – the no claims discount – you are likely to see on your car insurance premium. If you do have to make a claim, you risk losing part, or all, of your no claims discount.

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How long does a no claims bonus last? 

While some car insurance providers offer no claims discounts for up to eight years of claims-free driving, the maximum figure is generally five years. If you do claim, you risk losing some, or all, of your no claims discount.

What’s the maximum no claims discount? 

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 building up a no claims discount for a number of years, drivers can receive a maximum discount of around 70 or 75%.

What happens to my no claims bonus if I need to make a claim? 

If you need to make a claim on your car insurance and your insurer pays out and cannot reclaim it from another driver’s insurance policy, you’ll usually lose some, or all, of your no claims discount. 

Your no claims discount will be reduced in line with ‘step back’ rules which can be found in your car insurance policy documents. This usually knocks down the discount by one or two years. 

Do I lose all my no claims bonus after an accident? 

What happens to your no claims discount after an accident will depend on whether or not the accident was your fault. If it was, you may lose some or all of your bonus. 

If the accident wasn’t your fault and your insurance provider is able to recover the costs from the other driver’s insurer, this won’t have any effect on your no claims discount. 

Matters can get a little more complicated if you were involved in an accident with an uninsured driver as your insurance provider won’t be able to recoup the costs and as a result, your no claims discount is likely to be affected. 

If your car is stolen or vandalised, this will usually be treated like an at-fault claim by insurers as it’s unlikely you’ll be able to recover any costs from the culprit. Your no claims discount will be reduced or removed as a result.

If you are involved in an accident where no one was to blame, both insurance providers may split the cost of the claims and both yours and the other driver’s no claims discount would be reduced or removed. 

Do I lose my no claims bonus for windscreen replacement? 

There are certain types of claim that won’t affect your no claims discount, so if you get a chip in your windscreen and need to get it repaired or replaced, you won’t lose any of your NCD. You will still have to pay an excess, however.

How long does a no claims bonus last without insurance? 

Proof of no claims is usually valid for two years. This means if you haven’t had car insurance for a while, perhaps because you sold your vehicle, your no claims discount will expire after those two years and you’ll need to build up a new discount from scratch when you next take out a policy.  

How do I keep my no claims bonus without a car? 

If you currently don’t have a car, you should still be able to keep your existing no clams discount providing you buy another car and take out an insurance policy within two years – after that, your NCD will be invalid. 

How do I transfer my no claims bonus to a new car?  

You’ll usually need to provide proof of the how much no claims discount you’ve acquired. This will usually be provided by your existing insurer, but you’ll need to ask your new insurer exactly what proof they need.

Can I protect my no claims discount?

A way to safeguard your no claims discount 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 discount 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.

Can a no claims bonus be used on more than one car? 

A no claims discount applies to a single policy, so you won’t be able to use it on any other vehicles you own that are covered by their own insurance policy. However, you can build up a second no claims bonus on a separate car insurance policy for a second car. 

You can also have a single no claims discount on a multicar policy. But an at-fault claim for one car will lose the discount on the entire policy.

Can named drivers build up a no claims discount? 

Named drivers are not generally able to build up a no claims discount. However, some insurance providers will allow it, so long as the named driver later takes out a car insurance policy of their own.

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