What is no-claims bonus?
Your no-claims bonus is designed to encourage and reward safe driving. Essentially it gives you money off your car insurance if you don’t make a claim for a set period of time. The more years you drive without making a claim, the better your no-claims discount will be.
You take the discount with you when you move car insurance providers, as long as you are driving your own car and are listed as the primary driver. If you are a named driver on somebody else’s car and you move insurance providers, you won’t take the no-claims bonus with you and will have to start fresh. In fact, it is unlikely that you’ll be able to build one up at all, but this is starting to be offered by some insurers.
Even though your no-claims bonus stays the same when you move insurers, the specific price of your discount will differ from one provider to the next. This is why it’s worth shopping around to find the best price for the level of cover you need before switching.
How does no-claims bonus work?
Your no-claims bonus is built up from the moment you begin driving and can even be transferred between insurers, as mentioned above. Making a claim can lead to you losing some (or all) of your no-claims bonus. This depends on who is decided to be at fault for the incident. If you are proven to not be at fault, then your NCB should not be impacted.
Being at fault doesn’t necessarily mean that you did anything wrong. Sure, your insurer will consider you to be at fault if you cause an accident by driving dangerously. But if your car is broken into, for example, and the police can’t find a culprit, you will also be at fault.
Under these circumstances, being at fault simply means that your insurer will have to pay out for the damage instead of somebody else’s. Unfortunately, you will probably lose some or all of your no-claims bonus, too. In cases where both parties are at fault, both driver’s NCB will be affected.
How to check no-claims bonus?
If you do need to access your no-claims bonus, to see how many years you have on there or how much your discount is, you can contact your provider. It also might be worth looking at your policy document, renewal letter or cancellation notice if you are switching. Whichever of these are the newest documents will have the most up-to-date version of your no-claims bonus.
If there is anything you don’t understand, again, we recommend contacting your insurer. They will be able to give you all the information you need.
Does no-claims bonus expire?
Yes, unfortunately, it will reset if you decide to take time off driving.
Your no-claims bonus expiry date is two years from the last time you had a valid insurance policy. If you don’t want to lose it, you will need to take out a new policy within these two years.
If you want to take a break from driving for longer than two years, your no-claims bonus will start from scratch when you take out your next policy.
Should I protect my no-claims bonus?
Protecting your no-claims discount (or no-claims bonus), is where you pay an extra fee on top of your car insurance premium. This gives you a safety net because you are allowed to make a set number of claims (discounting ones where you aren’t at fault) before your discount is affected.
There are pros and cons to protecting your no-claims bonus that you should consider carefully.
Pros
- keep your no-claims bonus – protecting your no-claims bonus allows you to keep the discount if an accident happens and you’re found to be at fault
- pay less in total – it might make financial sense to protect your no-claims bonus if you’ve spent years building up a good discount
- peace of mind – this will give you the peace of mind that if something happens outside of your control, you can still keep the bonus
Cons
- increase in premium – by protecting your no-claims bonus, you only safeguard the discount on your premium, not the premium itself
- pay more for the added protection – this extra cost, while small, may not make it worth paying for on top of the cost of your insurance
- it might be a step back – this is where, instead of protecting your no-claims bonus, the insurer steps back (reduces) the cost in line with their step back scale
How to keep no-claims bonus without a car?
If you’re currently without a car, this doesn’t mean you should lose your discount. As long as you get a new car and take out insurance within two years, your no-claims bonus will remain valid. If you’re not ready to get behind the wheel within two years, you’ll have to weigh up whether it is worth losing your no-claims discount when you do start driving again.
How do I get proof of my no-claims bonus?
Previously, insurance companies would share this information between them when moving to a new supplier. However, all the information about your no-claims bonus can now be accessed by authorised insurance companies through the No-Claims Discount (NCD) database. This stops them needing to provide manual information to each other, as the database is always kept up to date.
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Fiona Peake
Personal Finance Writer
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
