What is No-Claims Bonus in Car Insurance?
How does no-claims bonus work in car insurance?
Each year you do not claim on your car insurance policy, you earn a further discount, meaning your no-claims bonus (NCB) will increase, giving you greater savings on the following year’s car insurance costs.
There is no set rule of how much discounts are, and they can vary between different car insurance companies.
How much could your no-claims discount save you on your car insurance costs? Let’s take a look.
How much NCB will I get?
You’re no claims discount increases each year you don’t make a claim.
- 30% off after one year.
- 40% off after two years.
- 50% off after three years.
- 60% off after four years.
- 65% or more after five years.
How much discount is available on no-claims bonuses?
So, for example, if your insurer gives you a x% discount for every year that passes without a claim, you’ll be getting X% off your annual car insurance policy after X years and X% off after X years of claims-free driving.
The above table is a guide to the no-claims bonus you could get. But check the details with your insurance company first because rates vary between insurers, and the discounts could be more or less.
Can named drivers build up a no-claims bonus?
With most car insurers, named drivers on another person’s Insurance policy won’t earn any no-claims bonus. Only the main driver, the policyholder, gets the no-claims.
So, suppose you’ve been driving someone else’s car as a named driver on their Insurance and later take out your own car insurance. In that case, you won’t usually benefit from any years of claim-free driving on their policy.
However, a few car insurance companies offer no-claims bonuses to named drivers. But the bonus usually only applies to policies with that insurer.
So, if you build up a no-claims bonus as a named driver, you won’t be able to take the bonus to a new insurer. You can use any bonus you earned with your new insurance policy when you get your own car. but only if you stay with that current insurer.
Many drivers seeking to go on someone else’s insurance policy as a named driver are young drivers and have yet to earn any no-claims bonus. Insurance providers see these young named drivers as a high risk.
What happens when named drivers have an accident?
If a named driver has a collision, the main driver/ policyholder must make a claim on the policy, which will affect their no-claims bonus.
When named drivers have an accident, the claim is against the policyholder, even if they are nowhere near the car or the collision itself.
What is the maximum number of no-claims bonus years?
Most UK car insurance policies will allow you to build up a maximum bonus of five years on your no-claims bonus.
However, several insurance companies allow the number of years no claims bonus to continue beyond five, sometimes nine or even fifteen years, without you making a claim. You’ll only receive a tiny extra discount for those additional years, but another benefit exists.
Suppose your insurer allows up to nine years of claims-free driving, and you go and have a prang. You’ll expect to lose two years NCB, dropping from nine to seven. The significance of making a claim should impact your discount.
However, with only five years of no-claims bonus, dropping from five to three years will significantly affect your no-claims bonus.
What is the maximum percentage no-claims bonus you can get?
Each year you drive without making a claim on your car insurance policy, your no-claims bonus will increase annually with a cap usually around five years.
So, for one year (see above table), your discount is 30%. The percentage increases each year up to year five when you get 70%, typically the maximum no-claims discount available on a car insurance policy.
How is my NCB affected if I am in an accident?
What happens if someone claims against my Insurance and the collision is my fault?
If your insurance company pays out because you are at fault, you will likely lose some of your no-claims bonus unless you have protected no-claims bonus.
There are no set rules regarding how much no-claims bonus you might lose if you are to blame for the accident. However, as a guide, be prepared to have your NCB affected with a loss of two years of no claims each time you make a claim on your car insurance policy.
What if the other driver’s insurer pays out?
Suppose the collision is the fault of the other driver. In that case, your insurer should be able to reclaim any repairs to your car from the other driver’s insurer. You can usually expect your no-claims to be left intact.
What if neither party accepts fault for the accident?
In car insurance claims where both parties claim the other is at fault, if the insurers can’t agree on liability for the incident, they’re probably split the cost of the claims. In this case, the no-claims bonus of both drivers could be affected.
Can I protect my no-claims bonus?
What is a protected no-claims bonus?
NCB protection allows you to typically make a couple of claims over three to five years without losing your no-claims bonus. Check out the number of claims you can make and the period over which they can occur because these numbers can differ between insurers.
NCB protection is an optional add-on to your car insurance policy, for which you pay. The plus side of the protection to your NCB is that in the event of at-fault claims against your Insurance, your NCB remains intact.
How many years of claim-free driving before you can get a protected no-claims bonus?
Insurers differ in how many claim-free years you need for protected no-claims bonuses. Many insurers require five years of claim-free driving before you can get NCB protection, while others ask for only three years.
I have NCB protection - will making an at-fault claim increase my Insurance cost?
Even if you have no-claims protection, having an accident could make you a higher risk because when the insurer next calculates your car insurance costs, they look at your previous claims.
No-claims protection does not save you from the rising cost of car Insurance.
Protected no-claims can be a wise investment; however, it won’t shield you from future car insurance price increases.
You can read more here about why it is worth protecting my no-claims bonus.
What happens if I don’t protect my no-claims bonus?
Without no-claim protection, if you claim on your insurance policy and your insurer has to pay out, you’ll likely lose some of, if not all, your NCB.
Even if you make a claim which is not your fault, such as if your car is vandalised – it could still go down as an at-fault claim, putting your no-claims bonus at risk.
How do I provide proof of my no-claims bonus?
When you switch to a new provider, they will tell you what information is needed about your existing no-claims bonus.
This information can be obtained from your previous insurer:
Using your car insurance renewal letter, which should state how much no-claims bonus you have
The cancellation documents from your previous insurer should contain your proof of no-claims bonus
Contact your previous car insurance company and ask them how much of a no-claims bonus you have accumulated
Does a windscreen damage claim affect my no-claims bonus?
Most insurance companies allow you to claim for a chipped or cracked windscreen damage without impacting your no-claims bonus.
Can I transfer my no-claims bonus to a new insurer?
You can typically take your no-claims bonus with you if you take your Insurance to another provider. Your new insurer will likely request evidence of your no-claims bonus within a specified number of days from request or purchase.
What’s the difference between a no-claims bonus and a no-claims discount?
There’s no difference. No-claims bonus and no-claims discount describe the discount you get on your car insurance policy if you don’t make a claim.
Your no-claims bonus should increase for each no-claim year, although all insurers have a limit.
However, don’t be surprised if you make a claim and your premium increases at renewal time.
Can you transfer an NCB to a motorbike, van or car?
Transferring your no-claims from one type of vehicle to another, for example, from a motorbike to a car, is at the insurance company’s discretion. Not all insurers will accept a no-claims bonus for a different type of vehicle. If they don’t, they could offer an introductory discount.
How long does a no-claims bonus last without Insurance?
A no-claims bonus has a maximum life span of two years without being insured. The insurer will likely need proof of the no-claims bonus on your previous vehicle.
Is my no-claim bonus at risk if an accident wasn’t my fault?
Hopefully not. It is down to the insurance company acting for the driver at fault to pay the claim. Your insurer recovers any money due, leaving your no-claims bonus intact.
However, your car insurance policy may be affected next time your renewal comes around, as the Insurance policy cost is about the risk and number of accidents you might have, including both at-fault and not-at-fault.
What happens if an uninsured driver hits me?
If you were unfortunate enough to be involved in a collision caused by an uninsured driver, you would have to claim on your Insurance and not a third party. You could lose some or all of your NCB even if the accident is the other driver’s fault, one of several reasons you might consider getting your NCB protected.
What happens to my NCB when I change my car?
When you change your car, if you stay with the current insurer, you can transfer your NCB to your new vehicle and keep the same policy without losing your no-claims bonus.
However, suppose you switch to another car insurance provider before the year ends – you won’t receive the discount for the year.
Do I lose my no-claims bonus if a car accident is not my fault?
You might! If somebody hits your car and you are not at fault for the accident, the claim should occur on the other party’s Insurance, and your no-claims will be safe.
However, if bad luck strikes and the other driver is not insured, you’ll likely take the hit on your Insurance.
Even if the accident wasn’t your fault, you’ll probably lose some or all of your NCB. The same scenario could occur if your car gets hit in a car park while you are shopping and there is no witness or your vehicle is vandalised again without a witness.
Protecting your no-claims bonus keeps your NCB safe.
