Car insurance no-claims bonus explained

Building up a no-claims bonus could make a big difference to what you pay each year in car insurance costs. The more you earn, the greater the potential discount. But making a car insurance claim could mean you lose it all. We explain how it works and what you need to look out for.

What is a no-claims bonus?

A no-claims bonus (NCB), sometimes referred to as a no-claims discount, is the number of years that you haven’t claimed on your car insurance policy.

We use these terms interchangeably throughout this guide.

A no-claims bonus of 5 years or more could give you a discount on your insurance costs. But the level of discount might vary between insurers.

That’s why it’s worth shopping around when choosing your policy.

How does a no-claims bonus work?

Let’s say your car insurance policy costs £1,000 and you’d built up a no-claims discount percentage of 20%. You’d pay £800 where you’d otherwise have paid £1,000.

Every year that follows where you don’t make any claims, your discount increases. So, 5 years without any claims might mean you get a 60% discount.

To get a rough idea of how much a no-claims bonus would help lower your annual car insurance costs, here are the average car insurance costs as the bank of NCB grows each year.

*Confused.com data, October 2020 - October 2021. Average car insurance premium based on full UK driving licence, no NCB protection added.

How do I build my no-claims bonus?

NCBs are pretty straightforward - for every year you’re insured without making a claim, you earn another year's bonus.

Some companies offer accelerated policies where you can earn a bonus in 10 months rather than 12.

What's the maximum no-claims discount I can get? 

In theory, you could build up an unlimited amount of NCB. So long as you make no claims in a year, the number should keep ticking up.

In reality, most insurance providers cap the maximum no-claims discount at around 5 years. Some insurance companies do go beyond this - you might find an insurer willing to give you a discount on 8 or 9 years' worth of no-claims.

And having those extra years could come in handy. The average car insurance costs for a driver with 5 years' NCB is £713. But this figure gets slashed to £559 with 9 years'. So, when you're shopping around, it could be worth keeping an eye out for insurance companies that have a higher NCB cap.

If I make a claim, how is my NCB affected? 

If you make a car insurance claim on your policy where your insurer pays out, you're likely to lose some, or all, of your no-claims bonus.

If your car is damaged in a crash the other party was at fault, your insurer may be able to reclaim repair costs from their insurer. This should leave your NCB intact.

In cases where insurers can’t agree liability for a collision, they may split the cost of the claims. In this case, both your and the other drivers’ NCB could be affected.

Your NCB could also be affected if your car is stolen or damaged by bad weather.

If you get a new policy with a reduced NCB and are later found not at fault, you could get your NCB reinstated. The insurer might also refund any extra money you paid.

What can I claim for without affecting my no-claims bonus?

There are some circumstances where making a claim might not impact your no-claims bonus. For example, if you were in an accident that it was the other driver's fault, you shouldn't see your no-claims bonus go down.

If you have a comprehensive car insurance policy, claims on windscreen cover are unlikely to impact your NCB. But get in touch with your insurance company beforehand to make sure.

What does protected no-claims mean? 

Often referred to as no-claims discount protection, protecting your NCB allows you to have a certain amount of ‘at fault’ accidents. Without affecting the bonus.

This means that your no-claims bonus remains intact even if your insurer can’t claim their costs back. Each insurance company has different rules regarding how many claims you’re allowed.

Is it worth protecting my no-claims bonus?

If you've built up years of no-claims, you might want to consider paying extra to get that protected. If not, and you make a claim, you might lose everything you've built up as well as the discount.

Protecting your no-claims bonus doesn't necessarily stop your costs rising after a claim though. This is because insurers use your claims history to calculate car insurance prices - so a claim would likely show up even with your NCB protected.

Insurers might factor in any remaining NCB you have after a claim when they calculate future policy costs. But there’s no guarantee that your price for the next year is going to be the same or lower.

How can I get proof of my no-claims bonus? 

When you get your car insurance renewal letter, you should see how much no-claims bonus you have. You can use this as your proof of no-claims, if your new insurance company required it.

If you don't have that to hand, you can get in touch with your previous insurer and ask them to send you proof of your no-claims bonus.

If you're switching providers, your previous insurer might have sent you a policy cancellation notice. This might also contain your NCB details.

How can I find out how many years' no-claims bonus I have? 

You should be able to get your no-claims bonus details on any letters or emails you have from your insurer that contain your policy details.

If you've got access to your account details online, you might also find your NCB details there.

If you can't find it, you can get in touch with your insurance company and ask them directly. They should be able to give you an up-to-date figure of how many years' no-claims you have.

Can named drivers build up no-claims bonus? 

Yes. Some insurers offer what’s called a named driver no-claims bonus. This means you get a discount if you're insured as a named driver on someone else's policy and haven't claimed.

If you've built up a no-claims discount as a named driver and you want your own cover, your existing insurer should consider your discount. This discount should apply when transferring your policy over.

But if you’re thinking of switching insurers, check that your new insurer factors in your no-claims discount – not all do.

What happens when I change my car or policy? 

You can usually transfer your no-claims bonus to another car. But if you switch insurers before the year is up, you won’t get the NCB for that year.

Insurers should provide proof of your bonus at the end of your policy term. You can pass this on to your next provider when you switch.

Some insurers may provide your proof of no-claims in the car insurance renewal letter they send you. If it's not there, you can call your insurer and ask them to send it.

Can I use my no-claims bonus on 2 policies?

No – you can only use your no-claims discount on a single car insurance policy at a time. But you can earn a no-claims bonus on 2 cars - it just means starting from scratch on either vehicle.

You could also transfer your no-claims bonus from different policies, depending on what saves you the most money.

Does no-claims bonus apply to work vehicles? 

As a general rule, commercial insurance policies don’t typically let you build up an NCB.

If you use a fleet van under an ‘any driver’ policy, then chances are that you won’t be able to build up any no-claims bonus.

But some insurers might take your business driving experience into account when calculating costs for a policy.

If you’re listed as the main driver and using your van for work and personal use you could earn a no-claims discount. Just make sure your policy covers you for both uses.

If your car is insured for work but the policy also includes ‘social, domestic and pleasure’ purposes, then you should be able to build up a no-claims bonus.

It’s worth checking the terms and conditions of your policy on this as each insurer is different. 

Can no-claims bonus from a motorbike or van be transferred to a car?

The short answer is that it depends on the insurer. Some may let you use an NCB that's been earned on a motorbike or van, while others won't. To be sure, speak to the insurer and ask the question.

They may ask for proof of the no-claims history, so it's worth getting a copy of this if you don't already have it.

How do I transfer my company car NCB?

In the event that you give up a company car, you should be able to use any no-claims bonus built up on that car.

But there may be specific circumstances that let you transfer this. For example, if you were named on your company’s insurance policy for a particular car and specifically for your use only.

Usually, when changing insurers, you'd need proof of any NCB you’ve built up from your last provider. But with company policies, many insurers might settle for confirmation from your employer. 

Can I transfer NCB from overseas?

If you’ve built up a no-claims bonus overseas, you may be able to transfer it when you come to UK shores.

Much depends on the insurer and they usually specify which countries they accept no-claim discount from.

If your no-claims bonus was built up outside this list of countries, you may be unlucky. It’s worth contacting your insurer and finding out what they can offer.

How can I keep a no-claims bonus without a car?

Let's say you’ve sold your car and don’t drive for a period of time. Some insurers might honour your no-claims bonus when you cancel your car insurance and get a new policy.

It all depends on the timescale. If you don't have an active insurance policy for more than 2 years, you might struggle.

In such instances it might be worth contacting the last insurer who provided you with cover.

They might be more flexible than other providers. Possibly reducing your no-claims discount rather than sending you back to square 1.

How does no-claims bonus work on multi-car policies?

If you have a multi car insurance policy, each policyholder gets their own no-claims bonus. So, even if someone makes a claim and loses some of their NCB, it shouldn't affect the discounts of other people on the multi-car policy.

As with standard car insurance policies, any claim from a named driver is likely to impact the no-claims bonus of that car.