Should I protect my no-claims bonus?

A no-claims bonus (NCB), also known as a no-claims discount, is a discount on how much you pay for your car insurance, known as a car insurance premium. 

Your premium can vary based on your age, gender, car type, and location. It’s also affected by your driving history. 

If you don’t make an insurance claim for the year you have your policy for, this shows you’re a safe and responsible driver with a good driving history. So, your insurer rewards you by reducing the price of your car insurance policy for the next year. This amount is your no-claims bonus. 

Your no-claims bonus increases each year you don’t make an insurance claim. The longer you go without making a claim, the more discount you get.

The discount is a percentage of the full amount you pay for your car insurance policy. 

For example, if your first-year premium is £1,000 and you drive safely without making any claims, at the end of the year, you earn one year’s no-claims bonus. If your premium for the next year is discounted by 20% (a typical NCB discount), your next year of car insurance will cost £800, 80% of your first-year premium. In this example, you’ve earned a £200 NCB. 

Each claim-free year increases your no-claims bonus and reduces your premium. You can typically build up to nine years’ no-claims bonus, which will usually give you the maximum discount. After that, the discount you get from your no-claims bonus is likely not to change. 

Actual NCB rates may vary between insurers. Add-ons, such as breakdown cover, aren’t usually affected by your no-claims bonus. So, you’ll pay the pre-NCB price for any add-ons you choose. 

Building a high NCB is one of the best ways to lower your car insurance premium. 

Making an insurance claim can reduce your no-claims bonus, increasing the cost of your next premium.

Many insurers let you make one claim in two years or two claims in three years before taking away your discount. If you make multiple claims in a year, you might lose all your no-claims bonus.

Some car insurance claims will affect your no-claims bonus, while others won’t. 

For example, your no-claims might not be affected if you’re involved in an accident that wasn’t your fault. 

A claim on emergency breakdown cover doesn’t count as an insurance claim, so it shouldn’t affect your discount. 

If you have windscreen cover included in your policy and you claim to get a chip repaired, this also might not affect your no-claims bonus.

You should always check your car insurance policy details to make sure you’re getting the best from your no-claims discount. 

Many no-claims discounts last for two years after your car insurance policy ends. If you don’t renew your policy within two years, you may lose the no-claims you’ve earned.

Insurers typically allow between five and nine years’ no-claims bonus before they stop discounting your premium.

No-claims bonus protection is an optional add-on to your car insurance policy. 

With this protection, you can make claims without affecting your no-claims bonus. 

Having no-claims bonus protection doesn’t guarantee your car insurance premium won’t increase after a claim.

No-claims bonus protection can offer peace of mind if you’re worried about potential accidents or claims. This can be valuable when you’ve built up a healthy discount over the years. 

However, it’s worth noting that no-claims bonus protection costs extra. 

You might want to weigh the benefits of NCB protection against the costs. If the fee is reasonable and you can afford it, it could be worth considering. 

You could pay a higher premium if you switch providers and don’t tell the new insurer about your no-claims bonus. 

You should be able to find proof of your NCB by logging into your insurer’s website to view your policy details, including the no-claims bonus you’ve collected. 

If you’ve already left your previous provider, you can get proof of your no-claims bonus in the following ways: 

• renewal letter – check your car insurance renewal documents, which you typically receive when your policy is nearing renewal

• cancellation notice – find your cancellation letter, which you should get after switching insurers or ending a policy

• ask your old insurer – if you can’t find these documents, then your previous insurer should agree to send you a copy of either of these letters.