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No claims discount explained

Wondering how a no claims discount works? A no claims discount, or bonus, essentially means you’ll get money off your car insurance if you haven’t made a claim. Most insurers will offer this, but the exact discount can vary.

We’ll take you through the details of what it means to have a no claims discount, how to apply it to your insurance, and what happens if you need to make a claim.

What is a no claims discount?

When you take out an insurance policy, you can start building a no claims discount. This means that you’ll benefit from a reduction in the cost of your policy for every year you remain claim-free.

The discount is usually worked out in terms of the number of years. For example, after three years of driving without making a claim, you’ll be entitled to three years no claims discount.

Some companies refer to this reduction as a ‘bonus’ as opposed to a ‘discount’, but they are the same.

What’s the maximum no claims discount I can get?

All providers vary but many insurance companies cap their no claims discount at nine years, although it might be possible (albeit fairly rare) to find an insurer who extends theirs to 15 years.

In terms of the amount of discount  you could potentially benefit from, this will again differ from one insurer to another. However, many companies offer around a 30% one year no claims discount and approximately 60% after the maximum of nine years.

But it’s still important to keep in mind that individual quotes are likely to vary widely across companies so, if you’re searching for the best value insurance policy, it’s worth getting a few quotes to compare.

How long do I need to be driving to qualify for a no claims discount?

Usually, you’ll be able to start benefiting after one year of driving without making a claim. And this also includes driving on a provisional licence. As long as you have your own policy and are not just a named driver, you can begin building your no claims discount.

What if I make a claim?

This depends on the nature of your claim and the company’s terms. But, generally, as long as the accident wasn’t your fault and the other party’s insurer pays out any costs, your no claims discount shouldn’t be affected.

If you make a claim that was your fault, you can usually expect your no claims discount to reduce by a couple of years and, typically, the more claims you make, the more your discount reduces.

Can I protect my no claims discount?

Most insurers allow you to add no claims discount protection for an additional cost. This enables you to protect your discount even in the event of a claim. Again, it’s worth having a look around and comparing multiple insurers before taking out this protection.

H2: What if I switch car insurance providers?

If you change to a different insurance company, you’ll usually be able to transfer your no claims to your new policy. They’ll probably ask for evidence of your no claims, which you’ll need to submit in writing or via email.

Can an insurer check my previous claims?

When you take out a car insurance policy, the provider will likely check the central database for any existing claims and your claim history. So, it’s important to be upfront about any loss of your no claims discount and any claims you’ve made in the past.

Remember, it’s vital to keep your insurance company updated on any changes that may affect your policy or you could be at risk of it being invalid.

What if I have a break in my policy?

There might be times when you take a break from driving and end up with a gap between insurance policies. If this gap is more than two years, it’s highly likely that you’ll lose your original no claims discount and will need to begin building it up again. If it’s less than two years, most insurers will let you keep your no claims.

H2: Is the no claims discount attached to the car or the driver?

Your no claims discount stays with you, the main policyholder, not the car you’re insured to drive. You’re unable to transfer the discount to another driver. Named drivers are also unable to build up their own no claims. To do this, they’d need a separate policy in their own name.

Multi-car insurance  policies work the same way, even though you can usually add up to six cars onto one policy at the same address. In this situation, a driver can only build up their no claims discount on their own policy, which is normally registered to just one of the cars.

It stays with the policyholder so other driver’s claims shouldn’t affect your insurance or your no claims discount.

What if I have more than one policy?

You can have as many car insurance policies as you want, but you’ll only be able to build up one individual no claims discount. But taking out more than one policy shouldn’t affect your no claims.

Key takeaways

A no claims discount can help reduce the cost of your car insurance but it’s worth considering each insurer’s terms and conditions and premium costs before you decide on a provider.

It’s also beneficial to weigh up the advantages of having no claims discount protection in place. While it will cost extra on top of your premium, you’ll have the guarantee that you won’t lose your bonus should you need to make a claim. But remember that the overall cost of your premium will go up anyway once you’ve claimed.

Looking for short-term cover that won’t affect your no claims discount?

We provide temporary car insurance from one hour up to 30 days. Whether you need short-term cover to borrow a car, to tide you over between annual policies or to take a test drive, we can help.

Cover can be taken out alongside your regular car insurance and your no claims bonus on your main policy won’t be affected.

We also provide temporary learner insurance for provisional licence holders, which can help you build up that all-important driving experience before your test. And, rest assured, our learner policies protect the annual policyholder’s no claims discount.

What are you waiting for? Get a quote now and discover how quickly you can be covered.