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A no-claims bonus (NCB), also known as a no-claims discount, is a discount on your premium based on your claims history. And building this bonus is one of the best ways to secure a cheap car insurance quote.
You accrue your NCB each year you don’t make a claim on your car insurance policy. The more years of no-claims history you have, the bigger the discount on your car insurance policy will be.
Read on to learn more about NCBs, how to earn one and how to avoid losing it.
Your driving history is one of the first things an insurer will look at when you apply for car insurance. Your claims history is part of your driving history. It includes any claims you’ve made on previous car insurance policies, including those held with other insurers.
If you haven’t made any (or many) claims in the past, the insurer will assume this will continue in the future, making you a less risky customer. This means your premium will be cheaper.
Your NCB is measured in years. The more years of NCB you have, the cheaper your insurance will be.
It takes time to build an NCB. New drivers will start off without one, while older drivers might have had time to build up 10, 15 or 20 years’ NCB. This is one of the reasons why young drivers pay more for car insurance. The sooner you have a car insurance policy in your name – with you as the main driver – the sooner you can start building an NCB.
An NCB is a percentage off the full price of a car insurance policy.
For example, if a policy normally costs £500 per year but an NCB of 30 per cent applies, the policy will be reduced to £350.
An NCB builds up over time; the longer you go without making a claim, the greater your discount will be. For example, you may get a 10 per cent discount after one year without a claim and a 20 per cent discount for two years without claims.
It’s difficult to tell exactly how much an NCB can save you, as insurers don’t typically reveal how they calculate premiums, but some insurers boast that an NCB can reduce premiums by up to 60 per cent.
Each insurer typically has a maximum number of years you can build an NCB. Most insurers will increase the discount for up to 15 years of no claims, after which the discount will remain the same.
An NCB can apply to all types of car insurance policies, including third party, third party fire and theft and fully comprehensive.
Some insurers may ask for proof of your NCB. However, insurers can check your claims history using industry claims data, so it’s not a good idea to lie, as you’re likely to be caught.
You can find out how many years’ NCB you have by looking at:
Your NCB will remain intact as long as you’re insured and don’t make a claim.
If there are periods when you don’t own a car, your NCB will last for two years. This means that if you last held insurance more than two years ago and now want to drive again, your NCB will be back to zero.
If you make a claim on your car insurance, it will affect your NCB.
However, you won’t necessarily lose all of your NCB by making one claim. Instead, the insurer may reduce your discount to a previous level. For example, if you have seven years’ NCB and you make a claim, the insurer may reduce this level to five years.
Some claim types – windscreen damage, for example – probably won’t affect your NCB. You might also keep your NCB if you’re involved in an accident that was someone else’s fault and your insurer recovers the costs from their insurer.
You can pay a fee to add no-claims discount protection to your car insurance policy. Protection means you won’t lose your entire bonus if you make a single claim.
Depending on the insurer, this may protect your NCB against a certain number of claims in a set timeframe. For example, you may be able to make one claim within two years without losing your whole discount.
Some insurers will guarantee your NCB. This means a claim won’t reduce your bonus, but you won’t get a further discount for that insurance period.
Paying for no-claims discount protection is a gamble. It can save you money if you make a claim, but might not be worth it if you don’t end up making a claim.
If you don’t protect your NCB and you make a claim, you’ll lose some or all of your discount. Whether you lose all of your bonus or it’s just reduced depends on your insurer and how many years’ NCB you’ve built up.
For example, with Aviva, two or more at-fault claims in one year would result in your NCB being stepped back to nil at renewal. Admiral’s Protected policy allows two claims in three years before your bonus is reduced.
If you’re a named driver of a car but not the main driver, you usually won’t be able to build up an NCB in your name.
However, a small number of insurers, including AA and Allianz, let named drivers build up an NCB on someone else’s policy, although this will only count if the named driver takes out their own car insurance policy with the same insurer.
Marmalade offers Named Young Driver Insurance, which is a separate policy from the main driver’s insurance and allows young named drivers to build an NCB in their name.
Yes, you can keep your NCB if you change insurance companies. This enables you to seek out cheaper car insurance each year without losing your NCB.
You can also keep your NCB if you buy a new car.
No, you can’t insure two cars with the same NCB. To earn multiple NCBs, you need to insure multiple vehicles at the same time.
Some insurers may allow you to build up an NCB on a company car if you were the only person using the car.
Your company’s insurance provider should be able to provide evidence you were the only driver and give you a record of your NCB.
There’s no blanket rule about the maximum NCB – it depends on the insurer.
Quite a few insurers, including LV, Hastings Direct and Privilege, cap it at nine years. Other insurers have much higher maximums – it’s 20 years with AXA and Sterling, and 29 years with AA.
