No-claims bonuses and discount explained
No-claims bonus and discount will impact the price of your car insurance.
What’s a no-claims bonus?
It’s a discount you get on your car insurance for every year you’ve driven without making a claim.
Each year the cost of your insurance is reduced as a percentage up to a max threshold - the higher the number of years, the greater the discount.
Key points
- A no-claims discount (NCD) increases every year you don’t make a claim, bringing the cost of your premium down
- Named drivers can also earn NCD on some policies
- Your NCD can be transferred to another car, all you need is the evidence required by the insurer
- An NCD is sometimes called a no-claims bonus (NCB). It’s the same thing
Your NCD is valuable. It shows insurers you’re a safer driver, so cuts the cost of your car insurance. If you’ve built up years of claim-free driving its worth protecting. Think carefully before you claim if the cost of repair is relatively small.
There’s no difference between bonus and discount. The terms are largely interchangeable when it comes to no-claims. Some companies refer to an NCB, others an NCD.
It’s the amount of discount that’s crucial, and what you can get depends on your insurer. They all offer different rates, so keep it in mind when shopping around for cover.
How does a no claims bonus work?
The amount of no claims bonus you get depends on the number of years you’ve been driving without making a claim on your insurance. The actual amount of discount varies by insurer though.
For example, your insurer could offer a 30% discount for your first year of claim free driving, and then 10% for each additional year after that. If you’ve had five years with no claims, your discount amount would be 70% (which is commonly the maximum amount offered).
If you need to claim, you’ll likely lose your no claims discount - even if the incident wasn’t your fault - so you’ll need to build it back up again.
Building up your NCB
The only way to build up an NCB is to drive without making a claim. After a year, you'll have 12 months NCB to benefit from.
The discount offered between insurers will differ, but it will grow every year if you don’t make any claims.
Named drivers and no-claims bonuses
With a few insurers named drivers can earn NCB, which can be helpful when they come to take out their own insurance policies. It’s worth checking - according to Defaqto, 10% of 325 comprehensive car insurance policies allowed a named driver to earn an NCD.[1]
Transferring NCD to a new car
You can transfer your NCD to another or new car, but you’ll need to provide proof of how much NCB you’ve built up.
You just need to ask the new insurer what evidence they need. Normally it should be provided by your existing insurer.
How do I get my no claims bonus discount?
It’s usually applied automatically. When you get your renewal letter, it should say on there how many years of no claims bonus you have, which you can use as proof of your no claims discount if you switch insurers.
How your NCB brings down the cost of other insurance
It varies across insurers, but your careful driving could cut the price of your buildings and contents insurance too, depending on the insurer.
If you have two cars you can build up your NCB on each car separately or consider a multi-car policy. Some apply your discount across all the cars you've covered.
Protecting your NCB
You can protect or guarantee your NCB too. If you have several years claims-free driving under your belt, then it might be worth spending extra to protect it.
NCB protection should allow you to make a claim, or even more than one, without impacting your discount, or only reducing it by a year or two - it varies between insurers.
The key is to weigh up the cost of protection against the discount. If you don’t make any claims, then it’s just an extra cost.
How does my no-claims bonus affect how much I pay?
According to our data on drivers over 50,[2] the more years no claims bonus you have the cheaper your premiums might be.
| No-claims bonus (years) | Best premium[2] | Price change from previous NCB level |
|---|---|---|
| None | £577 | - |
| One year | £458 | -20% |
| two years | £456 | -0.5% |
| Three years | £438 | -1.8% |
| Four years | £430 | -1% |
| Five years | £415 | -3% |
| Six years | £391 | -5% |
| Seven years | £386 | -1% |
| Eight years | £367 | -4% |
| Nine years | £329 | -10% |
| 10-19 Years | £322 | -2% |
| 20+ Years | £292 | -9% |
[2]Best premium price for customers over 50 that quoted through GoCompare between January and November 2022.
Is it worth protecting no claims bonus?
If you’ve built up a number of years discount, you could lose it all due to just one claim, so it could be worth considering.
Frequently asked questions
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Your insurer sends you proof of NCB at the end of your policy, every 12 months if you have an annual policy. But, you can request proof at any time and the insurer will supply it.
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No. You can only use your exisiting NCB in one policy for one car, but you can build up a separate NCB in another car insurance policy for a second car.
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Your proof of NCB expires after two years. Even if you're planning to be off the road for a long period of time, it could be worth keeping your car insurance policy ticking over, particularly if you've got many years of NCB.
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Yes, a no claims bonus (NCB) and no claims discount (NCD) are the same thing.
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[1]Last checked 3 January 2023