No Claims Discount

How a no claims discount could affect your car insurance premium

By Mehdi Punjwani Wednesday 11 September 2019

A no claims discount on your car insurance could help you save an average of 24% on your premiums

Motorway driving

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Everyone knows that car insurance premiums aren’t cheap. The average price for an annual fully comprehensive policy was £490* in June 2020.

Thankfully, there are several ways to drive down the price of your car insurance – and one of the most effective is to build up a no claims discount (NCD) or bonus.

Discounts if you don't claim

Most insurers will offer no claims discounts to drivers that don’t claim on their car insurance. They do this because motorists who don’t claim on their policy are considered less risky, and so the cost of their premiums fall.

The size of the car insurance no claims bonus varies between providers, but you could knock up to 24% off your annual premium* if you can manage five consecutive claim-free years.

Claim rates per postcode

The areas with the highest claim rates across the UK:


Highest claim rate per 1000 enquiries

WD - Watford


CM - Chelmsford


HP - Hemel Hempstead


SG - Stevenage


AL - St. Albans


The areas with the lowest claim rates across the UK:


Lowest claim rate per 1000 enquiries

HS - Isle of Lewis


KW - Kirkwall


ZE - Shetland Islands


BT - Belfast


IM - Isle of Man


Will each claim affect my no claims discount?

If you make a claim on your car insurance and your insurer pays out, you’ll lose some or all of your no claims bonus.

If you make a claim and both you and the other driver are at fault – or both parties can’t agree on who is liable – the two motorists may see their no claims bonus affected.

It’s more complicated if you’re involved in an accident with an uninsured driver and need to make a claim. Where one insurer may protect your NCD, another could wipe your history of no claims – so always keep this in mind when you compare car insurance policies. If it looks like your no claims discount will be affected, you should approach the Motor Insurance Bureau.

However, if you claim following an incident that wasn’t your fault, your no claims discount should remain intact. Other things, like claiming for repairs to your windscreen, for example, usually have no impact on your no-claims bonus.

Plus, if you have more than five years of no claims discount but you need to claim after an accident, you may not necessarily lose all of your no claims discount, but just two to three years’ worth of the bonus.

What about minor damage?

If we take your no claims discount into account, it’s probably worth considering paying for any minor damage out of your own pocket. This will save you losing any of your NCD.

For example, imagine you scratch the paintwork of your car when parking and a garage quotes £300 to fix the damage. The voluntary excess on your policy might be £250, so if you were to claim on the policy, the insurer would pay out only £50.

Building up no claims discount

You can build up your car insurance no claims discount on most types of motor insurance policies, including third party, third party fire and theft and fully comprehensive. You should, however, check the details if you buy temporary cover as it does not always apply.

A no-claims discount generally only accrues to the main driver, so if you are a named driver on someone else’s policy, you can’t build up your own bonus. Some insurers will recognise the claims history of additional drivers, but only reward no claims discount if and when they buy their own policy with the same insurer.

How much could you save on your premiums?

Number of NCD years Percentage of savings on your premium











Accelerated bonus 

Some insurers run accelerated bonus schemes that allow you to earn your first year’s discount in 10 months rather than 12, a bonus on a bonus.

This type of scheme can be particularly useful to younger or less experienced drivers, who typically pay higher premiums than older and more roadworthy motorists.

Protecting your no claims

If you choose to, you can pay extra to protect your no-claims discount. This allows you to make a number of claims within a year without jeopardising your NCD – and it can be worth the money.

Drivers who make a claim within five years can expect their premiums to rise by as much as 6% according to researh by MoneySuperMarket*.

However, the cost of cover would increase by only 5% if the no claims discount were protected.

It pays to shop around

Be aware that a no claims discount does not shield you from premium rises. The price of car cover can, and probably will, still increase each year - even if you don’t make a claim.

It’s therefore important to shop around at renewal instead of automatically sticking with the same insurer. MoneySuperMarket makes it easy to compare cheap insurance quotes from over 110 different car insurance providers*.

When you’re looking for quotes, make sure you give detail of any no claims years that you’ve earnt, because you can take your NCD to a new insurer. The discount might not be the same, but the new firm should honour your claims history. You can also transfer your no claims discount to another vehicle, perhaps if you bought a new car.

*51% of people received a quote of £490 or less for fully comprehensive car insurance based on data, June 2020.


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