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About Your No Claims Bonus

How does your no claims bonus affect insurance?

Damaged carThe No Claims Bonus (also referred to simply as the NCB or no claims discount) can be a large factor in determining your car insurance premium. Quite simply, a no claims bonus relates to how many years you have gone without making a claim on your car insurance. Most insurance companies use a sliding scale of discounts for each claim-free year. This can differ from company to company but a typical example might be:

  • 1 Year - 30%
  • 2 Years - 40%
  • 3 Years - 50%
  • 4 Years - 60%
  • 4+ Years - 65%

As you can see, even one year's no claims bonus can give you a substantial saving on your premium. This is one of the reasons why it's a good idea for young drivers to take out their own policy and start building their NCB as soon as possible.

The "Step Back" scale

If you make a claim on your insurance and your insurance company can't recover all their costs (for example if the accident was your fault, or you were hit by an uninsured driver), you might not lose all your no claims bonus but you will probably lose some of it (unless you have protected no claims bonus - see below). How much you lose will depend on the step-back scale, which can differ from one insurance company to another.

As a typical example, the step-back scale could mean that you lose two years' worth of no claims bonus for each claim you submit. So if your discount was 5 years and 65%, your first claim could reduce your NCB to 3 years and 50%. A second claim the following year could reduce it further, to 1 year and 30%. A third claim would reduce your no claims bonus to zero.

What is a "protected" no claims bonus?

If it's taken you five years of careful driving to reach the maximum no claims bonus, the last thing you want is to jeopardise it with an at-fault accident or a collision with an uninsured driver. Losing two years' worth of no claims bonus from your renewal premium will make a major difference to the cost. Fortunately you can protect your NCB. 

Once you have achieved the maximum discount most insurers will allow you to "protect" it. This means that in the event of an at-fault accident or a run-in with thieves or uninsured drivers, you will not lose any part of your NCB. Protecting your bonus usually costs a bit more on top of your premium, but the saving against losing part of your NCB makes it worthwhile for the extra peace of mind.

Limitations on a protected no claims bonus

The safety net of a protected no claims bonus is not unlimited. Rules differ between insurance companies, but if, for example, you make more than two claims in five years, or two claims in three years, your bonus could be affected.

Read your own policy wording carefully for your insurance company's rules about limits on claims.

It's important to note that although you may have a protected NCB, you are still required by law to declare any accidents on new insurance policies or at renewal.

Need a quote for insurance?

With or without no claims bonus, call us on *0344 493 7743 for a great policy or get a quote online.

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