What is a no-claims bonus (NCB)?
A no-claims bonus is a discount that car insurance companies offer drivers who haven’t made any claims on their insurance policies. Essentially, it’s a reward for safe driving. According to research by GoCompare, drivers with a no-claims bonus of five years or more could save up to 65% on their car insurance premiums in the UK.
How is a no-claims bonus calculated?
The no-claims bonus is calculated as a driver’s annual insurance premium percentage. For example, if drivers have a no-claims bonus of 50%, their insurance premium would be reduced by 50%. According to Kevin Pratt, the insurance expert at Forbes Advisor UK, “The longer you go without making a claim, the higher the discount you can earn on your premiums”.
Most insurance companies allow drivers to build up their no-claims bonus over a period of five years. After this time, the driver can usually get the maximum discount available, which can be as high as 70% in some cases. According to research by Compare the Market, 68% of drivers in the UK have a no-claims bonus of five years or more.
What happens if you claim?
It’s worth noting that if a driver does make a claim on their insurance policy, their no-claims bonus will be affected. Depending on the insurance company, the bonus may be reduced or cancelled altogether. Therefore, drivers should consider the potential impact on their no-claims bonus before making a claim, particularly for smaller amounts that may not be worth claiming for. According to Julie Townsend, the deputy CEO of Brake, “It’s important to weigh up the cost of making a claim against the potential impact on your no claims bonus”.
In summary, no claims bonus is a valuable discount offered by car insurance companies in the UK. By driving safely and avoiding accidents, drivers can build up their bonus and save money on their insurance premiums over time. However, it’s essential for drivers to consider the potential impact on their no claims bonus before making a claim on their insurance policy.
What is a protected no-claims bonus (NCB)?
Protected no-claims bonus (NCB) is an optional feature that can be added to a car insurance policy in the UK. It’s designed to protect the discount a driver has earned on their insurance premium, even if they make a claim on their policy.
Protected NCB means that if a driver makes a claim on their insurance policy, their no claims bonus won’t be affected. Instead, they’ll be able to retain the same level of discount on their insurance premium as they had before the claim. This can be particularly useful for drivers who have built up a high level of no claims bonus over a number of years.
It’s worth noting that while protected NCB can help to safeguard a driver’s discount, it won’t necessarily prevent their insurance premium from going up after a claim. The premium cost may still increase due to other factors, such as changes to the driver’s circumstances or the nature of the claim.
NCB as an extra
Protected NCB is usually offered as an optional extra by car insurance companies in the UK. Drivers should check with their insurance provider to see if they offer protected NCB and to find out more about the terms and conditions of the policy. According to research by MoneySuperMarket, around 37% of UK drivers have protected their no-claims bonus (source). This suggests that many drivers see the value in protecting their discount and are willing to pay extra for this feature.
When will you start to feel the benefit of zero claims?
If you are eligible for no-claims car insurance policies, you can save considerable money. Of course, the longer you have gone without making a claim, the greater the savings you can make. Generally speaking, an NCB of five years or more will significantly discount your premium.
FAQ about no-claims car insurance
- If I claim, do I lose my NCB? Yes, in most cases, you will lose some or all of your no-claims bonus. Some insurers will protect your no-claims bonus if you have not been at fault and prove this is the case.
- If I switch my car or insurance policy, what happens to my NCB? You will be able to transfer your NCB to another vehicle. If you switch your no-claims car insurance policy before the year ends, you will lose out on your NCB for that year. Please note that you cannot use your no-claims bonus on multiple vehicles.
- Can named drivers build up NCB? Usually, named drivers cannot build up their NCB. This is because the claim-free history supports the main driver’s good driving record.
Compare no-claims car insurance policies with Insuro
As you can see, you can save a large amount of money by taking out no-claims car insurance. Yet, some insurers offer bigger discounts than others. This is why using our comparison service is a must.
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