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No claims bonus

No-claims discount explained

published: 01 January 2022
Read time: 5 minutes

How to cut the cost of car insurance with a no claims discount

What is a no claims bonus?

If you don’t make a claim on your car insurance, your insurer will give you what is known as a car insurance no claim bonus.

This is a discount on your future premiums, cutting down the cost you will pay for your insurance when you renew your policy. Discounts of 60% or more are possible from some insurers.

If you pay £1,000 per year for car insurance, for example, and your no claims bonus is 20%, this means your annual bill will be reduced to £800.

It’s a reward from an insurer for not making a claim on your policy, which ultimately saves it money.

Motorway driving

How does a no claims bonus work?

For every year that passes without making an insurance claim your discount will increase. This means one year it may be 5% and the following 10%.

If you have a multi car policy, where you can insure up to six cars at the same address on one policy, each car will have its own no claims bonus.

This means if one person on the policy makes a claim on their insurance, it should not impact the other drivers on the policy and their discount should remain in place.  

How do I build up a no claims bonus?

You can build up a no claims bonus by not making a claim on your policy. This applies to all car insurance policies, including  third party, third party fire and theft and 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 for. 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 last year, the average premium for drivers with 5 years no-claims bonus is around 60% 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.

Insurers decide the maximum discount and years of having a no claims bonus they will accept. 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.  

*MoneySuperMarket data collected between Jan 2021 and Jan 2022.

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

You can usually transfer a no claims bonus if you move to a new insurer or buy a new car.

You’re unlikely to stay with the same insurer for a long time, as switching insurers is usually the best way to save money on your car insurance, but you don’t want to lose out on any discount you’ve built up when you do switch.

Therefore, when you buy a new policy, you can usually take any years you have saved with you.

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?

Claiming on your insurance means you could lose your no-claims bonus. This can have a big impact on the price you pay for your policy, especially if you’ve been able to build up a few years of discounts.

However, car insurance exists to protect you against things like accidents and theft and if you need to make a claim, you often have no choice but to do so.

Insurers recognise this and some allow you to protect your bonus and still make a claim on your insurance. No claims discount protection is an added extra you’ll need to pay for when you buy car insurance.

It lets you make a small number of claims – usually up to three over three years – without your discount being impacted.

Is it worth protecting no claims?

If you have a big discount you’ve built up, say 50% for example, 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. But if you’ve paid for the extra, it should be protected.

However, it all 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. 

It’s also worth remembering that even if you pay for the protection, your premiums may still go up. When you make a claim this can increase your level of risk to an insurer and that means your costs could rise. The protection is for your discount – not for the overall cost or your premium. 

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 need to make a claim and can prove you weren’t at fault, an insurer won’t touch your no claims bonus. This is because the insurer will have been 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.

Claims for glass damage, for example to fix a crack in your windscreen, are also usually exempt from having an impact on your discount.

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

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

If you make a claim on your car insurance, this could result in your no claims bonus being impacted.

An insurer may reduce your discount to a previous level. If you have five years of a no claims bonus built up, for example, and you make a claim an insurer may reduce this level to three years. This could reduce your overall discount down from 50% to 30% and this will affect the price you pay for your premiums.

To find out how your premium may be affected, contact your insurer and ask it 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 for 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” purposes. 

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.  

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

Your no claims bonus won’t last forever and it will usually expire two years after you end a policy.

So, if you don’t drive for two years and you’re not insured, your bonus will usually disappear and if you do buy a new policy you’ll need to start your bonus up again from scratch.

Can I use my no claims bonus on multiple cars?

You usually can’t use a no claims bonus on multiple cars. The only way to do this is to insure all of the cars at the same time, so the number of years of no claims will be the same if you haven’t claimed in that time.

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 also need to show proof of it from your previous insurer.  

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 too.

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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