Understanding your no claims bonus (2024)

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Understanding your no claims bonus (1)

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    No claims discount explained

    We all want cheaper car insurance, but what's the best way to get a discount? Besides paying up front, raising your excess, or driving less, your no claims bonus is probably the easiest way to lower your premium.

    So what is it the no claims bonus? How do you get it? And, how does it affect your insurance price?

    Understanding your no claims bonus (2)

    How does the no claims bonus work?

    A no claims bonus (NCB), or more correctly a no claims discount, is awarded if you don't claim in the latest policy year. Even if you have an accident that wasn't your fault – you're hit by an uninsured driver, or your car gets stolen – you could lose your NCB, and your premium could even go up at renewal.

    You can save a lot on your insurance once you've got 5 or more years' NCB – around 60 to 80%. The value of each year's NCB varies between insurance providers, but according to The Association of British Insurers, even just 1 year's NCB could lower your insurance by 30%.

    There's also an NCB expiry, which happens if you stop driving for more than 2 years. After that you'll have to start again.

    Of course, if you've never driven you won't have an NCB, so insurers see you as a higher risk, which means more expensive insurance.

    To get that NCB a bit quicker, and ultimately get cheaper insurance, some providers offer 10 month policies. These are sometimes called a 'Bonus Accelerator'. Such policies aren't accepted by all insurers, so it's worth checking before trying to speed things up.

    What about being a named driver?

    Usually you can't get an NCB as a named driver, because it's based on the main driver's experience. Some insurers do allow named drivers to build up an NCB with them, but you may find that it's only available if you stay with that insurer. Only a selection of insurance companies accept named driver NCBs.

    Multi-car policies

    Your NCB should still apply to a multi-car policy. With most policies of this kind, only a driver who needs to claim will have their NCB affected. You can't use your NCB on two cars, but it still helps to reduce the overall cost of your multi-car insurance.

    What happens if I claim?

    When you make a claim on your policy you'll usually lose some or all of your NCB if your insurer has to pay out – even if it's not your fault. How much of it you actually lose depends on how many years NCB you have, as well as the insurer.

    After an accident, there might be some situations where your NCB isn't affected. Let's say you were hit by another driver and they agree it was their fault – your insurance provider may recover all the costs from the other driver's insurance, saving your NCB.

    Can I protect my no claims bonus?

    Many insurers offer NCB protection for a small fee. This means that if you make a claim for something like damage caused by a storm, if your car is stolen, or hit by an uninsured driver then you won't lose your NCB.

    Some insurance providers also cover fault claims, so your NCB is still protected even if your insurer can't recover the costs of an accident.

    Even if you've protected your NCB, it isn't a guarantee that the premium won't go up later on. Your premium is decided by your claims history, and your NCB is taken off the final price.

    Can I transfer my no claims bonus?

    Transferring the NCB between insurers is usually simple, but if you switch before the 12 month policy is over then you won't earn your NCB for that year. This is because you're given your proof of NCB at the end of your policy at renewal.

    If you're not sent your proof of NCB with a renewal letter, contact your insurance provider and ask them to send it to you. This is sometimes called a NCB certificate, and if you want to switch you'll need to show it to the other insurer.

    While your NCB is the best way to lower your insurance premium, it doesn't always mean your insurer will give you the best discount at renewal.

    It's a good idea to get your NCB letter when your policy ends, and shop around to get the most out of your discount. Visit the AA directly for more information on car insurance and to see the levels of cover we provide.

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  • Understanding your no claims bonus (2024)

    FAQs

    Understanding your no claims bonus? ›

    A no claims bonus (NCB), or more correctly a no claims discount, is awarded if you don't claim in the latest policy year. Even if you have an accident that wasn't your fault – you're hit by an uninsured driver, or your car gets stolen – you could lose your NCB, and your premium could even go up at renewal.

    How does your no claims bonus work? ›

    How it works. Your no claims discount builds up with each claim-free year, so the longer you go claim-free the bigger your discount will be. No claims discounts vary from insurer to insurer, but they can be as much as 30% for one claim-free year and 60% for five claim-free years.

    Can I transfer my no-claims bonus to my son? ›

    Most classic car insurance policies don't allow you to build up a no claims bonus. You won't be able to transfer your existing NCD either.

    How many years until you lose your no claims bonus? ›

    Since a no claims bonus is intended to give an indication of how careful your recent driving has been – if you let it lapse for too long, it will expire. Don't worry though – you've got 2 years before you lose any bonus you've built up – but after that, you'll start from zero again.

    Do I lose my no-claims bonus if the accident wasn't my fault? ›

    Does a non-fault claim affect my no-claims bonus? It might sound unfair, but you can lose your no-claims bonus for an incident even if it wasn't your fault (unless you've got a protected no-claims bonus). After all, it's a “no-claims bonus”, not a “no-blame bonus” – and a claim is a claim, regardless of who's at fault.

    Is it worth losing no claims bonus? ›

    If an accident wasn't your fault it won't usually impact your no-claims discount unless the accident was caused by an uninsured driver. For that reason, it might be worth paying to protect your no-claims discount, particularly if you have five years or more of no claims.”

    What happens if I don't protect my no-claims bonus? ›

    If you don't protect your no claims discount and you're forced to make a claim, you'll lose your existing no claims discount. Whether it's lost entirely, or just reduced, depends on: The amount of discount you've built up. The number of claims you make.

    Can I check my NCD online? ›

    Easily check your NCD rate online through our car infomation checker. Input your vehicle plate number and identity card number, postcode and click 'Check Now'. The tools provides information such as Next NCD Percentage, Next NCD Effective Date, Current NCD Percentage, and Current NCD Effective Date.

    Do I keep my no claims as a named driver? ›

    No claims bonuses only apply to the main driver

    They're usually the owner of the car, or its 'registered keeper', but not always. It's the main driver who gets the reward for no claims, even if there are other named drivers on the policy or the car is owned by someone else.

    How does insurance work when it's not your fault? ›

    If you file a claim with your carrier when you are not at fault, your carrier will eventually begin a process called subrogation. Essentially, this means that once liability is determined, your insurance carrier will send a demand to the at-fault party's carrier to pay back the damages that were paid out to you.

    Does your insurance go up after a claim that is not your fault? ›

    Under California law, an insurer cannot increase your premiums when you aren't at fault.

    What happens if you put the wrong no claims bonus? ›

    After issuing the policy to you, insurance companies as a process contact your previous insurer to verify your declaration. In case they find a misrepresentation, they may charge an extra premium or worse cancel your policy mid-way! Yes, you risk being without cover midway if you are found declaring a wrong NCB.

    How much does car insurance go down after 1 year no claims? ›

    In many cases, your insurance will go down by 5-20% in the first year of no claim, depending on your insurer. After the first year, this discount increases each year, usually by 5%, if you don't make a claim. But it only increases up to a maximum discount, usually 50-60%, and a number of years — usually 5-6 years.

    How do I transfer my NCB to a new car? ›

    Transferring your NCB to your new car

    Submit Form 29 and Form 30, which is a notice stating the transfer of ownership of the car and an application for transferring your NCB to the new car. The insurer would then be able to issue an NCB certificate with a three-year validity. Submit this to your new insurer.

    How much no claims discount do I have? ›

    How to find out how many years no-claims discount you have. It will be displayed on any insurance documents you have been sent, or you can ask your insurer to confirm to you in writing.

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