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What is a No Claims Discount?
Your no claims discount (NCD), or no claims bonus, is a discount on how much you pay for your car insurance and is based on how many consecutive years you have been driving without making an insurance claim on your policy.
If you don’t make an insurance claim, it shows insurers that you have a good driving history and are less likely to claim in the future. Insurers reward you for this by reducing the price of your policy for the next year. Each year that you don’t make an insurance claim, the higher your NCD is, and the lower your premium is as a result.
Insurance providers often bracket numbers of years together, e.g, they may give the same discount to drivers with 4-6 years of no claims, then increase this discount once you reach seven years.
Insurers tend to allow between five to nine years NCD before they stop discounting your premium further.
Can I Protect My No Claims Discount?
Some insurers give you the option to protect your NCD, even if you do actually claim on your insurance.
NCD protection is a policy add-on that will make your premium more expensive. However, this could save you money in the long-run if you are forced to make a claim and have built up a big NCD over the years.
With NCD protection, if you have to claim on your insurance, you may lose a year or two of the discount you have built up, e.g, if you had 9 years NCD, this may be reduced to 8 or 7.
If you don’t have this protection and claim on your policy, you will lose part of or all of your NCD. Whether you lose it entirely or just face a reduction will depend on how much discount you have accumulated, how many claims are made, and who your provider is.
Can I Build up a Discount as a Named Driver?
NCD tends to only apply to the policyholder or main driver. Therefore, if you are a named driver on someone else’s vehicle, you don’t tend to be able to claim any NCD for this.
Do I Keep My Discount if I’ve Not Driven in a While?
Many car insurance providers will not accept an NCD that’s older than two years, i.e, if you have gone over two years between policies.
As long as you have a valid policy with no claims or have gone less than two years between policies, you should have an active NCD.
Do All Claims Affect My No Claims Discount?
Which claims will affect your NCD will depend on your insurance provider. You should read your policy documents thoroughly so that you understand all of the ins and outs of your insurance policy.
Some claims will affect your NCD while others won’t. For example, your insurer may keep your NCD if you are involved in an accident where you aren’t at fault, or if your policy includes windscreen cover and you claim to repair a chip.