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No claims bonus explained

Emily Sullivan
Written by  Emily Sullivan
Saarrah Mussa
Reviewed by  Saarrah Mussa
5 min read
Updated: 01 May 2024

In this useful guide, we show you how to cut the cost of car insurance with a no claims bonus, and explain everything you need to know about no claims discounts.

What is a no-claims bonus?

A no-claims discount is a reduction on your car insurance premium cost based on your claims history. When you apply for car insurance, the insurer will look at your claims history. This will show any claims you have made on previous car insurance policies including those held with other insurers.

If you haven’t made any claims, you’ll be eligible for a no-claims discount. This is also known as a no claims ‘bonus’, but ‘discount’ is more relevant as it provides a discount on your next car insurance policy.

You can accrue a no-claims discount each year. The more years of no claims you have, the bigger the discount on future car insurance policies will be and the lower the amount you will pay.

If you have many years’ no claims discount you can get discounts up to 60% from some insurers. However, insurers don’t publicly state how much discount they will give customers but it is something that will be factored into the calculations for your premium.

Number of years NCB

Average car insurance price*

0

£1299.20

1

£1064.26

2

£901.66

3

£771.22

4

£741.61

5

£688.39

10

£460.65

15

£444.43

*Based on the median annual price of comprehensive policies sold through MoneySuperMarket in March 2024.

How does a no-claims discount work?

A no-claims discount is a percentage off the full price of a car insurance policy. For example, if a policy normally costing £1,000 is eligible for a no-claims discount of 20%, it would cost £800.

A no-claims discount builds up over time. The longer you go without making a claim, the more your discount will be. For example, you may get a 5% discount after one year of no claims and then a 10% discount for two years of no claims.

How long do no-claims discounts last?

For every year, your discount will increase up to a level set by your insurer.

There will be a maximum number of years you can build a no-claims bonus. This is decided by individual insurers and can vary from about nine years up to 20. A no-claims bonus can apply to all car insurance policies, including  third-party, third-party fire and theft and is fully comprehensive.

How do I build up a no-claims bonus?

You can build up a no-claims bonus by not claiming your policy. This applies to all car insurance policies, including  third-party, third-party fire and theft and is fully comprehensive.

For every year your discount will increase to a level set by your insurer. There will be a maximum number of years you can build a no-claims bonus. This is also decided by individual insurers but is usually 15. 

How much could I save by building up a no-claims bonus?

Insurers set their own rules when it comes to the minimum and maximum discounts given but they usually range from between 5% and 60%.

According to MoneySuperMarket data from the first half of 2023, the average premium for drivers with a 5-year no-claims bonus is around 41% lower than the premium for drivers with 0 years*.

Remember though, that many factors affect the price you pay for your premium, including age, driving experience and location.

To find out how much you could potentially save you can contact an insurer and check what limits it sets or calculate your no-claims discount with our free tool.  

*Based on annual price fully comprehensive car insurance policies, with one driver holding a full UK driving licence. Data collected between January 2023 and June 2023.

Can I transfer my no-claims bonus to a new policy or provider?

You can transfer a no-claims discount if you move to a new insurer or buy a new car. Therefore, when you buy a new policy, you can usually take any years you have saved with you.

This is to your benefit as the cheapest way to buy car insurance is normally to shop around and switch insurers at renewal time.

How do I get proof of my no-claims bonus?

Some insurers may ask for proof of your no claims bonus while others will check this online using data on claims made.

If you’re asked to give a new insurer proof of your bonus, you can get this from your previous insurer. You may be given details of your bonus automatically when you end a policy but if not contact your old insurer and ask it to provide these details.

How can I protect my no-claims bonus?

Insurers normally offer the option to pay a small fee to ‘protect’ your no-claims bonus. This protection means you won’t lose your entire bonus when you make a single claim.

Buying ‘no claims bonus protection’ allows you to claim on your policy without losing 100% of the discount. Insurers differ in their approach, but the protection will usually cover a maximum number of claims in a particular time frame.

For example, you may be able to make two claims within three years without losing all your discount.

Is it worth protecting no claims?

Once you have several years of no-claims discount you might want to consider paying for no-claims protection. This is because if you make a claim, you could lose anything you’ve built up already.

Whether no claims bonus protection is worth the extra cost depends on your budget, how much your insurance is, and how big your discount is.

If you have a 50% discount and your insurance is usually £1,000, for example, this could bring the price down to £500. Paying £50 for no-claims bonus protection in this instance would make sense as you’re still saving money overall. But it’s a gamble, as you may not end up making a claim anyway.

It’s also worth remembering your claims history is only one factor taken into account when calculating car insurance premiums. For example, if you are convicted of speeding or moving to a high-risk area, your car insurance premium may rise even though you have a no-claims discount.

What can I claim for without affecting my no-claims bonus?

There are some car insurance claims you can make without damaging your no-claims bonus.

Usually, if you have an accident and can prove you weren’t at fault, your no-claims bonus won’t be affected. This is because the insurer will be able to recover any costs involved with the claim from the other driver’s insurer.

This is also the case if the other driver involved is uninsured, and the claim wasn’t your fault.

However, if no one was at fault, costs for any repairs may be split between insurers and this could impact both drivers’ bonuses.

Certain claims – for example, to fix a crack in your windscreen – usually won’t impact your discount.

How will claiming on my car insurance affect my no-claims bonus?

If you claim your car insurance, your no-claims bonus will be affected. But one claim doesn’t necessarily mean you will lose your entire discount.

Instead, the insurer may reduce your discount to a previous level. For example, if you have a five-year no-claims bonus and you need to make a claim, the insurer may reduce this level to three years.

This will mean you will pay more for car insurance than you would if you still had five years’ no claims, but less than if you had zero no-claims discount.

To find out how your premium may be affected, contact your insurer and ask what impact a claim will have on your bonus.

Can I use my no-claims bonus for work vehicles?

If you have a company car and you are the only person who uses it, some insurers may allow you to build up a no-claims bonus on it.

This means you are the only person using it for work but also for any other reason – such as going on holiday or to the local supermarket. This type of usage is known as ‘social, domestic and pleasure’.

Your insurance provider will be able to provide evidence you are the only driver and should be able to provide a record of your bonus too.

If you use your own car, not a company car, for work-related reasons, you need to make sure you have business car insurance. When you take out car insurance, the insurer will ask what you use your car for. The three options are:

  • Social, domestic and pleasure

  • Social, domestic and pleasure plus commuting

  • Social, domestic and pleasure plus commuting and business

Business use covers things like driving to work-related events, visiting clients, running work errands (i.e. taking cash to the bank) and driving to other offices or sites that aren’t your usual place of work.

Does my no-claims bonus build up if I don’t have a car?

There might be periods when you don’t own a car. If you don’t have car insurance in place for a while, you can usually reinstate your no-claim discount when you insure a car again, but it will depend on when the last policy ended.

With most insurers, as long as the date your last policy ended is within two years of your new policy starting, it will honour any no-claim discount you previously earned.

But if you go more than two years without owning a car and having car insurance, any previous no-claims bonus may revert to zero and you’ll need to start your bonus up again from scratch.

Sarah Tooze
Sarah Tooze
Car & Van Insurance Expert

Our expert says

“A no-claims discount can make a huge difference to the amount you pay for your insurance premium, although there’s no standard approach from insurers as to how much discount is applied. 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.”

Can I use my no-claims bonus on multiple cars?

No, you usually can’t use a no-claims bonus on multiple cars. This is the case even if you have a multi-car policy. Each car on the policy has its own bonus and these can’t be transferred to other vehicles on the policy.

Can I transfer a no-claims bonus from overseas?

You may be able to transfer a no-claims bonus if you’re moving to the UK from another country.

This all depends on where you were previously living and the insurer. To transfer the discount, you may need to show proof of it from your previous insurer. This will usually need to be written in English and be on official company-headed paper.

Can named drivers build a no-claims bonus?

If you are a named driver of a car, not the main driver, you usually won’t be able to build up a no-claims discount. However, if you then go on to take out your own policy with the same insurer, you may benefit from a discount. 

Does a no-claims bonus apply to all motor vehicles?

It’s not just cars where insurers let you build up a no-claims bonus, you can do it with other vehicles including motorbikes.

While you usually can’t transfer a bonus from a car to a bike, it’s always worth checking with an insurer to see if this might be possible.   

Compare car insurance quotes

It is always worth checking your car insurance is the best policy for you and your vehicle and that you’re not paying too much for it.

Comparing car insurance quotes with MoneySuperMarket is a quick and easy way to find affordable cover.

Just tell us about yourself, your driving history, and the car you want to insure, and we’ll search the market for quotes that match your requirements.

You’ll be able to compare policies by the overall cost of cover, the type of policy, and the excess you’d need to pay to make a claim. Once you’ve found the deal you want, just click through to the provider to finalise your purchase. 

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