Car insurance no-claims bonus explained
A no-claims bonus (NCB) is one of the magic phrases for any car owner on the hunt for insurance.
Also known as a no-claims discount, having NCB can be one of the most effective ways to reduce the price of your car insurance by proving you’re less of a risk to insurers. But accumulating and keeping a no-claims bonus isn’t always totally straightforward, so read on for our full guide.
What is a no-claims bonus?
A no-claims bonus is a discount that insurers can apply to your policy, based on the number of consecutively insured years you’ve gone without making a claim.
No-claims bonuses typically build to a maximum of nine years, but this can vary by insurer. How does it work? As each year of being insured and claim-free passes, your NCB grows and so could the discount you receive. This means (in theory) that safer drivers are rewarded for remaining claim-free.
No-claims bonus and types of cover
It doesn’t matter what type of car insurance policy you have, you should be able to build up your NCB. That goes for comprehensive, third party fire and theft or third party only policies.
There can be some exceptions, however. Classic or specialist car insurance may not accrue NCB, and with some exceptions you don’t typically gain NCB if you’re only insured as a second driver on a policy.
Multi-car insurance policies typically build a NCB for each policyholder, so you don’t need to worry that one person’s claim will affect the bonus for everyone else on the policy. The same goes for policies that cover multiple insurance products, such as car and home insurance – a claim on your motor insurance shouldn’t affect your home insurance premium.
How can I lose my no-claims bonus?
Your no-claims bonus will be affected if you make a claim on your car insurance policy and your insurer pays out. If you make a claim your no-claims bonus is typically reduced by two years if it’s unprotected.
This means your NCB is affected when you make claims on your insurance policy. Accidents that aren’t your fault shouldn’t affect your bonus as your insurer can recover its costs from the driver at fault. If you’re unfortunate enough to be involved in an accident with an uninsured motorist, your NCB could be impacted – it depends on your insurer and their conditions.
The same goes for other non-fault / non recoverable claims such as theft, vandalism or damage – your NCB may be affected.
Can I keep my no-claims bonus without a car?
If you’re taking a break from driving for whatever reason, you might be asking how long does my no-claims bonus last?
NCB doesn’t last forever if you don’t have an active insurance policy. Most insurers will accept NCB up to two years old, so if you cancel your policy and aren’t insured for longer than this you risk losing your hard-earned bonus.
How many years no-claims bonus can I get?
Generally, most insurers will accept up to nine years as a ‘full’ no-claims bonus and apply the maximum discount available. However, this may vary by insurer.
How do I protect my no-claims bonus?
Some insurers will offer you a Guaranteed or Protected NCB, this might be at an additional cost. Guaranteed means that you can make an unlimited number of claims and your bonus won’t be reduced – but you won’t get any extra discount in that insurance period.
Protected NCB means that you can make a pre-defined number of claims, for example this might be up to three claims in three years, before your bonus is reduced, but this will vary by insurer, and you also won’t get any extra discount in that period.
Don’t consider these as invalidating any claim you make, though. Insurers will still require you to disclose details of claims you make, and they may lead to an increase in your premiums.
Can I transfer my no-claims bonus?
Yes, it’s easy to transfer your NCB between insurers. Your new insurer will require proof of your NCB from your old one – this is typically sent out by default when your policy ends, but just to be sure you can request the document be sent to you when you’re in the process of cancelling your old policy.
If you don’t provide proof of your NCB to your new insurer, they may raise the price of your premium or cancel your policy altogether.
How do I check my no-claims bonus?
Contact your insurance provider and they’ll be able to inform you of your current NCB – you’ll also find it on your policy documents or renewal letters.
Can I build a NCB as a named driver?
You can’t build a transferable NCB as a named driver, however, some insurance providers will allow you to build up a bonus that can be applied to a policy with the same insurer. It’s typically known as ‘Named Driver Discount’ or similar.
It works great for occasional users who don’t want or can’t afford to run a car full-time. For example, university students who may only borrow their family car during holidays can benefit from an introductory discount when they take out their own policy. The downside, of course, is that you need to stay with the same provider, preventing you from shopping around for the best deals.
With mustard.co.uk and our Cheapest Price Guarantee*, though, you won’t need to worry about shopping around – you can put that no-claims bonus to good use, or start building one. Get in touch now to see how much you could save.
