What is a no claims discount?

A no claims discount, also called a no-claims bonus, is a discount you’re given on your car insurance for each year you drive without making an insurance claim. Driving without making claims shows that you’re a safe driver and that you’re a relatively low risk for insurance companies.

In most cases, each year of driving without an insurance claim typically earns you another year on your no claims discount, and each year gives you a percentage reduction in the cost of your insurance.

The discount you earn will vary by insurance providers. Most insurance companies also have a maximum discount for a no claims bonus, and once you reach that discount threshold, your no claims bonus won’t go any lower.

How long does a no claims bonus last for?

Your no claims bonus is usually valid for up to two years after an insurance policy ends. This can vary by insurance company though, with some accepting up to three years. 

This means that if you take a break from driving for a few years, you may still be able to keep your no claims discount for when you get back behind the wheel and buy a new insurance policy.

Will making an insurance claim mean I lose my no claims bonus?

If you make a car insurance claim and your provider pays out, it might result in you losing some or all of your no claims bonus. If both you and another driver are at fault, or cannot decide who is ultimately responsible, both drivers may end up losing their no claims bonus. However, if you made a claim for an accident that wasn’t your fault then your no claims shouldn’t be affected.

Depending on how many years you’ve held your no claims bonus for, and who your provider is, you may be moved down on your insurance provider’s ‘step-back’ scale if you do make a claim.

Providers have different steps of no claims discount which you can slowly move up over the years. If you end up making a claim for an accident you were in, you might be moved back down the scale and reset your discount to what it was in previous years.

An example would be a driver who’s built up 6 years of no claims, giving them the maximum discount. An accident could see them moved back down to just 2 years of no claims discount, to reflect the severity of the incident and the claim.

How can I protect my no claims discount?

After spending so long building up your no claims discount by being a safe and reliable driver, the idea of losing it over the smallest accident can sting. But some insurance providers give their policyholders the option to protect their no claims bonus as an optional extra with their insurance by offering no claims discount protection

No claims discount protection typically lets you make a number of claims per year without losing or affecting your no claims bonus, meaning you still get the discount you would without making those claims.

Can I bring my bonus with me from another insurer?

In most cases yes, you can carry over a no claims discount to another insurer. You will likely have to supply evidence of your no claims discount, which you should be able to get from your current/previous insurance provider.

Does my no claims bonus guarantee cheap car insurance?

While building up a good no claims bonus can help keep your insurance premiums low, it doesn’t stop the gradual rising cost of car insurance.

Using a price comparison tool will help you find the ideal policy for you at the best price possible, enabling you to make the most of your no claims bonus by combining it with a reasonably priced policy. You can also look at other methods of getting cheaper car insurance, such as making the most of multi-car discounts or improving your car's security.