No-claims bonus for car insurance explained

Every year you go without making a claim, you add to your no-claims bonus (NCB) - and that can mean a nice discount on your car insurance!

But how much could you actually save? Let's take a look.

How does a no-claims bonus work?

The more years you go without making a claim, the bigger your discount! Each claim-free year adds to your no-claims bonus, which can help lower your insurance premium.

Want to see how much of a difference it can make? Here's a look at the average cost of car insurance as your NCB grows year by year:

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

If you make a car insurance claim where your insurer pays out, you'll probably lose some - or even all - of your no-claims bonus. Most insurers tend to knock off 2-3 years of NCB for each claim.

But if the accident wasn't your fault and your insurer can recover costs from the other driver's insurer, your NCB should remain intact.

Things can get trickier when insurers can't agree on who's to blame. In those cases, they often split the costs, which means everyone involved could see their discount take a hit.

What does protected no-claims mean?

Protected no-claims is an optional add-on that helps you keep your discount even if you need to claim. It lets you make a certain number of claims in a year without losing your bonus. So, it can be a great way to keep hold of your hard-earned discount! Just keep in mind, it does come with an extra cost.

Also, not everyone is always offered NCB protection. Insurers usually offer it to drivers who've built up a good few years of no-claims. If you're eligible, it's worth weighing up whether the added cost is worth it.

Is it worth protecting my no-claims bonus?

That depends on your situation.

Even with protection, your premium could still go up after a claim. That's because insurers take your claims history into account when setting prices. But if you've spent years building up your discount, paying extra to protect it could be a smart move.

Think of it this way: if you've had a bad year and need to make multiple claims, you could lose your entire bonus without protection. With it, you might only see a small reduction, which could help keep your premium lower than it would be otherwise.

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

You've got a few options:

• Check your car insurance renewal letter - your insurer usually includes your NCB details on it.
• Call your insurer - they can confirm your NCB and send proof if needed.
• Look at your cancellation documents - If you've recently switched providers, your proof of no-claims should be included.

Can named drivers build up no-claims bonus?

Sometimes, yes!

Some insurers let named drivers earn their own discount. But this usually only applies if you stay with the same insurer.

So, if you've built up a NCB as a named driver and decide to buy your own policy, you can keep that discount with the same insurer. But, if you switch insurers, you'll probably need to start from scratch.

What happens to my NCB when I change my car?

Usually nothing. But, there's a few things to keep in mind:

• Sticking with your current insurer - If you're sticking with your current insurer, you can usually transfer your NCB to your new car without any issues.
• Switching to a new one - If you're moving to a new one, you might need to show proof of your NCB at the end of your policy term. Once you have that, hand it over to your new provider to make sure your discount carries over.

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

Not planning to drive for a while? If you're thinking of cancelling your car insurance, you could still hold onto your current bonus. But whether you can keep it, and for how long, depends on a few key things.

Your insurer

Each insurer has their own set of rules when it comes to no-claims discounts. So, if you take a break from driving and buy a policy later, your discount might change depending on which insurer you choose.

Some insurers might honour the no-claims bonus you built up with the previous policy. But, others may offer a lower discount or none at all. If you stick with the same insurer, you're more likely to keep your original discount. If you switch to a new one, you could lose that benefit.

How long it's been since you've had car insurance

Most insurers will let you keep your no-claims bonus around 2 years without an active car insurance policy. But after that? It's usually wiped, meaning you'd have to start building it up again from scratch.

Top tip: If you'll be off the road for a while but don't want to lose your bonus, it might be worth keeping your policy running. Even if you're not driving, maintaining your insurance could help keep your hard-earned bonus intact.

*Confused.com data, July 2022 - June 2023. Average car insurance premium based on full UK driving licence, no NCB protection added. Comprehensive policies only.