Orignally published March 14th 2016
When switching insurers you'll need to provide your new insurer with proof you've built up as many years worth of no claims discount as you say you have - and it's not always as straightforward as you might think.
So here's how to get proof of your no claims discount...
For every year you drive without making a claim on your car insurance your insurer will give you one year's no claims discount (NCD) that will give you a reduction on the price of your policy.
Also known as no claims bonus (NCB), these discounts are accumulated each year - the more years you drive without making a claim, the greater the reduction in the cost of your car insurance.
A word of warning though, both the discount offered and the maximum number of years' worth of NCD you can accrue varies from insurer to insurer, so be aware of this when switching.
Proof of no claims is usually only valid for two years, which means if you're off the road for any reason or don't have your own policy for more than two years, you'll be back to zero NCD the next time you take out cover.
At MoneySuperMarket, we recommend drivers not to renew automatically every year with the same firm but to check whether it’s worth switching provider. This is usually the case, as insurers tend to reserve their best prices for new customers rather than existing ones.
As and when you do make the switch your new insurer to ask for proof of no claims discount. The problem is, you’ll most likely have to get that proof from your last insurer, and each company handles this process differently.
One company might include your proof of no claims in your renewal or cancellation letter, another might send a specific proof of no claims discount letter, while a third company might only send proof if you request it.
We rang around a number of insurers to get find out how you're meant to get hold of your proof of NCD and whether any of them send the proof out automatically. Here’s what they had to say...
Once you’ve got your proof of no claims discount in hand - whether that’s a letter, in an email or a PDF - there are stringent rules about getting it to your new insurer which, if broken, can leave you out of pocket or worse, uninsured.
To make sure you’re not caught out, here’s a look at some of the things to watch out for when you change car insurance providers and have to provide proof of no claims discount.
- Your annual renewal letter may serve as proof of no claims discount, so hang on to it. Saga, Santander and HSBC, to name but a few, say their renewal letters should suffice as proof.
- Not all insurers will automatically send you proof of no claims discount. Check our table to see if yours does, and what you need to do if they don’t.
- There is usually a time limit on getting your proof of no claims discount to the new insurer. This tends to range from around 7 to 21 days.
- If you don’t provide proof of no claims within the time limit, your new policy could be cancelled, leaving you uninsured, or your premiums could be increased as if you didn’t have a no claims discount.
- Some insurers will not accept a photocopy of your proof of no claims discount letter, and will ask that you send the original. If this is the case, be sure to make a photocopy for yourself.
- Most insurers only recognise no claims discount up to a certain point. For example, the greatest discount HSBC and M&S will recognise is nine years. Insurers also have different maximum percentages, usually 70% or 75%.
- Your new insurer may contact your old insurer to get the proof of no claims discount itself, but it will tell you if it intends to do so.
- It’s also worth a follow-up call if you’ve not heard anything a week after you’ve sent the proof of no claims discount. The insurer should send you some kind of letter or email to confirm receipt, but don’t assume they’ve received it because you could be driving around uninsured.
As a real-life example of how easy it is to get tripped up by all of this, MoneySuperMarket employee Hannah Jones found herself unwittingly driving around without any car insurance after sending off proof of her no claims discount.
Hannah switched to Sheila’s Wheels and was told to send proof of no claims discount within 14 days, which she did.
To Hannah’s surprise, she received a letter from Sheila’s Wheels saying the policy had been cancelled because they hadn’t received the proof. This was two weeks after it was sent, and the letter was backdated by a week.
Making matters worse, when Hannah called Sheila’s Wheels to explain it had already been sent, she was told that they would contact her previous insurer and that they didn’t really need the paperwork!
Though Hannah was able to explains matters and correct the situation, at first she faced a cancellation fee and higher premiums if she still wanted insurance with the company.
Clearly, even if you receive and send your proof of no claims discount, things could still go wrong, so it’s worth checking if you’ve heard nothing back.
And if you've built up a number of years' worth of no claims discount it's worth considering protecting it so you can still take advantage of the annual reduction even if you've made a claim.
NCD protection allows you to have a set number of 'at fault' accidents each year without affecting the discount. This means your NCD remains intact even if your insurer can’t claim their costs back.
And while this won’t necessarily stop the cost of cover increasing after a claim - insurers use your claims history to calculate premiums, with the discount factored in at the end - it should still mean the annual cost is lower than if you'd not protected your NCD.
You can take your car insurance no claims discount with you when you switch insurers. The discount might not be the same, but the new firm should honour your claims history. You can also transfer your NCD to another vehicle, perhaps if you buy a new car.
Using this MoneySuperMarket tool, you can find out how the leading car insurance providers approach the subject.
How many no-claims discount years will my new insurer honour?
Work out how many of the years you've built up will be recognised
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Maximum number of
With most insurers, the size of discount you can achieve increases until you have built up five NCD years, at which point the maximum discount percentage is achieved. Despite this, some companies continue to recognise if you go further years without making a claim - but they don't increase the size of your discount (or at least not by much).
However, it can still be helpful. If your insurance company recognises up to, say, nine years of claims-free driving and you have an accident, you might lose two years and drop back to seven. As that's still higher than five, making a claim would not jeopardise your discount.
Other companies will always drop you back to three years after an accident, regardless of your number of years claims-free.
Maximum No Claims
The amount of discount earned increases with each year of claim-free driving.
So after one year you might get 30%, with the percentage increasing each year until you get 70% NCD after five years.
Most firms offer a maximum NCD of 70%, although some offer 75% or 80%.
Does it have an
Accelerated Bonus Scheme?
Some insurance companies offer drivers with no NCD an accelerated bonus scheme, which awards a year's NCD after 10 months claims-free driving.
After 10 months, you can either renew with the same firm, or move to another firm with the one-year bonus intact.
NCD protection adds an average of £33 a year on to the cost of car insurance and making a claim on a protected policy will see your annual premium increase by around £10.
If, on the other hand, you had five years’ unprotected NCD and made a claim, you could expect to see your car insurance jump by £130.
It's not quite as simple as it seems though - the research also found the longer you have NCD protection without making a claim, the less cost-effective it becomes.
If, for instance, you have five years’ protected NCD and make a claim within a year, you will be better off by an average of £54.
Making a claim in the second year will see your saving drop to £21, and then plummet to just £12 if you don't claim for three years.
And if you don't claim until the fourth year, you'll have paid so much in unused protection you'll actually be £45 out of pocket.
If you have a grievance with an insurance company, you need to make a complaint, so get in touch as ask for details of their official complaints procedure.
Always keep a note of the time and date of your call, and ask for the name of the person to whom you speak. Store any emails you send and any replies you get.
The insurance company will then have eight weeks to look into your complaint and respond fully.
If you wish, the Financial Ombudsman Service (FOS) – which is free to use – will contact the insurer and tell them about your complaint. Full details of this service here.
If you’ve complained to an insurance company and don’t feel you’ve been treated fairly, give the FOS a call: 0300 123 9 123 or 0800 023 4567.
They will review the case and, if appropriate, take up the matter on your behalf.