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No Claims Discount

No-claims discount explained

How a no-claims discount can save you money on your car insurance

Motorway driving

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What is a no claims bonus?

Also known as a no claims discount, a no claims bonus is a special discount most insurers offer to drivers who go a certain amount of time without claiming on their policy. 

Motorists who make no claims are the perfect customers for insurance companies, as they cost them no money to insure. So providers reward drivers who have not made a claim for between one and 15 years with discounts ranging from around 5% to 60% or more. 

It allows them to attract and hold on to “low risk” customers, and discourages people from making low-value claims. 

How does a no claims bonus work?

No claims bonuses are offered to drivers who avoid making a car insurance claim for a year or more – and can potentially cut your annual premiums by hundreds of pounds. 

Example: your premium is £1,000 a year but you have a 30% no claims bonus, meaning you pay £700 – a saving of £300

The longer you go without making a claim, the bigger the discount you should be offered, up to a certain point. So while you might be given a 10% discount after one year with no claims, driving claims free for five years could mean saving 50% or more on your premiums.

 

Number of years with no claims

Average annual premiums*

0

£1,342.99

1

£977.10

2

£781.76

3

£658.55

4

£601.44

5 or Above

£364.58

*Based on fully comprehensive policies with one driver holding a full UK driver's licence. MoneySuperMarket data collected between January and June 2021, accurate as of August 2021.

How do I build up a no claims bonus?

You can build up a car insurance no claims discount on most types of motor insurance policies, including third party, third party fire and theft and fully comprehensive – as long as they are in your name. You should, however, check the details if you buy temporary cover as policies of this kind don’t always qualify for no claims bonus schemes. 

The size of the discount and the number of years you have to drive without making a claim to start paying less for your car insurance differ between insurers. 

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

Some insurers keep increasing your no claims bonus for up to 15 years, with drivers going that long without making a claim being rewarded with huge discounts of up to 80%. 

However, many companies only recognise no-claims bonuses up to a certain number of years – for example, the maximum no claims bonus may apply after five years and there might be a top limit to discounts.

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

Yes, you can generally take your no claims bonus with you when you switch car insurance providers – as long as you can prove it exists. However, there’s no guarantee you will be offered the same level of discount as that will depend on your new insurer’s no claims bonus policy.

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

If you make a claim on your car insurance and your insurer pays out, you’ll generally lose some or all of your no claims bonus. And if you make a claim in which you and another driver are at fault – or can’t agree on who is liable – both of you could lose your no claims bonuses. 

If you claim following an incident that wasn’t your fault, though, your no claims discount should remain intact – unless the at-fault party was an uninsured driver, in which case what happens will depend on your insurer. 

While one company will allow you to keep your bonus, another will wipe your history of no claims – so keep this in mind when you compare car insurance policies. 

Some insurers also allow customers with several years of no claims bonus to keep some of their bonus after a single at-fault claim. If, for example, you have built up a five-year no claims bonus, making one claim may therefore reduce your discount to that offered to customers with three years no claims – but won’t mean you have to start again from scratch. 

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

Not all car insurance claims affect your no-claims bonus. Windscreen repairs are generally exempt, as are accidents where you can prove you were not at fault.

How do I get proof of my no claims bonus?

Once you get a car insurance quote that includes a no claims bonus, you generally have a couple of weeks to provide the proof you need to claim the discount. Failing to do this could result in your policy being cancelled. 

The three main ways to prove your no claims bonus are:

  1. With your policy renewal letter 
  2. With your policy cancellation letter
  3. By contacting your existing (or former) insurer 

How can I protect my no claims bonus?

You can pay extra to protect your no claims discount, but whether or not it’s worth doing this will depend on your personal circumstances, including the size of the no claims bonus you have built up. 

Generally speaking, the bigger your bonus, the more you stand to lose and the greater the value of the protection.

Just remember that taking out no claims bonus protection will not prevent the cost of your car insurance going up. The overall premium you pay is still likely to rise if you make a claim, so you’ll probably pay more even with your no claims discount applied.

Can I build a no claims bonus if I’m a named driver?

No claims discounts are designed for motorists with their own car insurance policies, on which they are named as the main driver. So if you are a named driver on someone else’s policy, you may find you are unable to build up your own bonus. 

If, however, you want to take out a policy on which you are the main driver, it’s worth asking the insurance company you have been with as a named driver if it will take your no claims history into account. 

Can I use my no claims bonus on multiple cars?

You can only generally apply a no claims discount to one car insurance policy at a time. So if you have two cars you will probably have to build up a new no claims bonus on a second policy in order to get a discount. 

This is usually the case even if you have a multi-car insurance policy. However, some insurers may allow you to use your no claims bonus on two policies for two different vehicles if you meet certain criteria (e.g. age, years of driving experience…). This is known as a “mirrored no claims discount”.

You can also transfer your no claims bonus from one policy to another – whether or not the new policy is for a different car. 

Can I use my no claims bonus for work vehicles?

You can’t usually build up a no claims discount if you drive a vehicle that is insured via an “any driver” policy. But if you’re listed as the main driver of a vehicle you also use outside of work, you will often be able to earn a no claims bonus if you go for one or more years without making a claim. To do this, you’ll need a policy that also covers you for “social, domestic and pleasure” purposes. 

For the no claims bonus you have built up with a company car to be taken into account when you take out an individual policy, you’ll usually need proof of it from the insurer concerned – although some insurers will accept a letter from your employer. 

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

Your no claims bonus is only usually valid for two years after your policy comes to an end. So if you don’t drive for a few years, you may well find you have to build up a new no claims bonus from scratch.

This is often the case even if you only appear as a named driver on someone else’s car insurance policy, although you may be able to use a no claims discount built up on a company car – as long as it’s in your name and you’re the only driver.

If you have only driven as a named driver in recent years, your best chance of being awarded a no claims bonus is to take out a policy with the insurer that covered you for that. 

Can I transfer a no claims bonus from overseas?

Some insurers will accept no claims bonuses built up in other countries. Whether or not you can get a discount based on your driving history overseas will depend on the country you were living in and the insurer with which you want to take out a policy. 

To claim a discount, you’ll have to prove you made no claims during the relevant number of years. So asking the insurance company you used while abroad for a document showing this is the best way to improve your chances of having your no claims discount applied to your new policy. 

Compare car insurance quotes

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 protection you’ll get with the 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.