What is a no claims discount?

A no claims bonus, also known as a no claims discount (NCD), can go a long way towards cutting the cost of your car insurance policy. For every year of claim-free driving, you will accrue a year of NCD, which can be used to save money when it comes to renewing your car insurance. The longer you drive without claiming, the larger the discount could be. Different insurance companies will allow for different lengths of bonus. Some may cap your bonus after 5-years of claim-free motoring but some may be longer.

If you make a claim, your no claims discount will be reduced; typically by 2 years but it will be up to the insurer to calculate the exact magnitude of the reduction. This is only the case if the accident was your fault, if not then your discount won't be affected. If the insurers cannot work out who was at fault, the claim may be split and both parties discount affected.

Most insurers allow you to protect your no claims bonus by paying an additional premium on top of the normal cost of your insurance. This is essentially an additional level of insurance which will allow you to retain your NCB if the worst happens. It's worth noting that even if you have this, if you move insurer, you will still need to declare any accidents and this may affect the cost of your insurance renewal.

You can not usually use time spent as a named driver towards your NCB, however your insurance company may take this into account when calculating your premium. The same is true of time spent dirivng a company car, and driving overseas.

It is important to keep a record of your no claims bonus for if you switch insurer at renewal time. Your insurance company may send you details of this along with your renewal price, or you may have to contact them to request it.