No claims bonus explained
Going for at least a year without claiming on your car insurance policy can earn you a discount - here’s how they work and how you can build your no-claims bonus.
Key Takeaways
If you go for at least 12 months without making a car insurance claim, your insurer will apply a no-claims bonus or discount to your premiums
The longer you go without claiming the more you save, and depending on the insurer you can build your discount for up to 15 years
You can even transfer it between insurers if you change your car insurance policy provider
What is a no-claims bonus?
A no-claims bonus is a discount applied to your car insurance premiums that you earn when you go for at least a year without making a claim. This discount accrues each year, so the longer you go without making a car insurance claim the more your insurer will discount from your premiums.
No-claims bonuses or discounts can give you up to as much as 60% off with some insurers when you build them up for years, although insurers don’t openly say how much they know off the cost of cover.
How does a no-claims bonus or 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 NCB of 20%, it would cost £800.
Your discount builds up over time. The longer you go without making a claim, the more your reduction will be. For example, you may get 5% off after one year of no claims and then a 10% reduction for two years of no claims.
How do I build up a no-claims discount?
You build up a no-claims discount simply by not claiming on your car insurance policy. This involves being a careful and diligent motorist to lower your risk of theft or damage from an accident, while also a bit of luck and the ability to cover small issues yourself. It’s up to you to decide if damage is worth a claim or if you can handle it without a payout from your insurer.
How do I get proof of my no-claims bonus?
If you’re asked for proof of your no-claims discount, you can ask your previous insurer for this and they should provide them. Insurers will either use this or online data about your claims to set your no-claims discount.
How long do no-claims discounts last?
Your no-claims discount will remain valid for two years if you cancel your car insurance policy, but after that it will reset.
How much can I save with a no-claims discount?
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 car insurance quote data from MoneySuperMarket, drivers with a one year discount paid on average £1,076 a year for cover, compared to £675 with a five year discount.*
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 the median annual price of comprehensive policies sold through MoneySuperMarket in November 2024.
Can I transfer my no-claims bonus to a new policy or provider?
You can transfer a NCD if you move to a new insurer or buy a new car. Therefore, when you buy another 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.
Can I claim on car insurance without affecting my no-claims discount?
Your no-claims discount might remain unaffected in certain situations, such as:
If you can prove you weren’t at fault in an accident, as your insurer will recover the costs from the other driver’s insurer - or even if they’re uninsured
If the claim was for a crack in your windscreen or something else minor
Can I use my no-claims bonus for work vehicles?
You might be able to build up a no-claims bonus on a work vehicle if you’re the only one who uses it, whether it’s for work or any other reason, like going on holiday or to the supermarket. Your provider should be able to show proof that you were the only driver and have a record of your bonus too.
If you use your own car for work-related reasons, you’ll need to ensure you have the right kind of cover, whether it’s for commuting or 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.
Can I use my no-claims bonus for 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 my 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 - it 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, usually written in English 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.
How do I protect my no-claims bonus?
You can protect your no-claims bonus by paying a small ‘protection’ fee to your provider, so if you need to make a claim you won’t lose your discount, or at least all of it.
It varies between insurers, but usually this protection should cover a maximum number of claims in a specific time frame. For example, you may be able to make two claims within three years without losing all your discount.
Is it worth protecting my no-claims discount?
Once you have several years of NCD 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 NCB 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% off and your insurance is usually £1,000, for example, this could bring the price down to £500. Paying £50 for 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 discount.
Does my no-claims bonus build up if I don’t have a car?
If you don’t have a car for a while or it’s declared SORN and you don’t need any insurance, your no-claims bonus will stay intact for two years for most insurers. If you’re uninsured for longer than this, it’s likely your bonus will reset.
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.