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What is a no claims discount?

  • What is a no claims discount?

Getting a no claims discount — all you need to know

Vehicle insurance is a legal requirement for motorists, and in the process of insuring your car, van, or motorbike, you'll no doubt come across references to a no claims bonus or discount. But what is it?

Many things affect your insurance premium, such as the vehicle you drive, your claims history, and even where you keep your vehicle at night. Included in the list of things taken into account by your insurance company is the number of claims you’ve made in your history as a driver. 

In this article, we’ll look at what a no claims bonus is, what might affect it, and whether or not you should protect it. 

What is a no claims bonus? 

A no claims bonus rewards drivers for not making a claim on their vehicle insurance policy in the form of a discount on their premium. The entitlement increases with each consecutive year of claim-free driving. 

Providing you keep driving (or at least stay insured on a vehicle), your no claims bonus doesn’t expire unless you’re uninsured for a long period of time — two years, for example. Providing you stay insured on a vehicle, your no claims bonus still stands. 

How much discount does a no claims bonus give you? 

The discount given for your years of not claiming will vary between insurers, but you could see a 30% reduction in your premium for one to two years without claiming, and as much as 60-70% for five years of no claims. 

What affects your no claims bonus? 

Making a claim on your vehicle insurance policy will affect your no claims bonus, but the good news is that if you’ve accumulated several years of entitlement, one claim won’t usually wipe the whole lot. 

For example, if you find yourself making a claim with a current no claims bonus of 5 years, you may see it reduced to 2 or 3 years. However, if you make a second claim, you could then be back at 0. 

As we would recommend with any important agreement, such as an insurance policy, read the small print so that you can understand the insurer’s approach to no claims discounts. That way, you’ll know where you stand if you need to make a claim. 

Can I get proof of no claims bonus? 

If you choose to end your policy, or even if you want to simply renew it, many insurance providers will provide proof of your no claims entitlement automatically. However, with some insurers, you’ll have to reach out to them in order to request that they send proof of your no claims bonus, which can usually be emailed or sent in the post. 

As your no claims bonus is earned by you, you are entitled to the proof of having done so, regardless of whether you’re sticking with the insurance provider you earned it with. 

Should I protect my no claims bonus? 

On some policies, you’ll have the option to protect your no claims bonus which, if you have accumulated a fair few claim-free years, you may be tempted to do. In these instances, you can pay a small amount on top of your premium to protect your no claims bonus in the event of a claim. This means you could still see your premium discounted in light of your years without claims — but do your homework on any Ts and Cs associated with this. 

When you’re weighing up whether or not to protect your no claims bonus, we’d recommend working out how much you’d be saving by not protecting your no claims bonus in comparison to the additional cost of your premium if your no claims discount was reduced or taken away. 

If I protect my no claims bonus, do I still have to declare claims? 

Yes, you do. A claim made will still stand, and you must still declare it in full to future insurers. Even if your no claims bonus is protected, this is not a guarantee that any insurance provider, either new or existing, won’t ask for higher premiums in reflection of your claim.