Car insurance: What is a no-claims bonus? - FAQs
One of the key determining factors in the cost of your car insurance premium is whether or not you have built up a decent no-claims bonus.
But what is a no-claims bonus? Is it the same as a no-claims discount? And why would you want to pay extra to protect it?
Luckily for you, we have the answers to all of your frequently asked questions (FAQs) right here! Shall we?
What is a no-claims bonus?
For every year that you don’t claim on your car insurance, you will earn an extra year’s no-claims bonus – sometimes referred to as a no-claims discount (NCD).
The longer you drive without needing to claim on your insurance policy, the less of a risk you are to your insurer. This means that they’ll be willing to cut the costs of your premium, as you are seemingly unlikely to make a claim.
Do I have a no-claims bonus?
Most insurers will save their best prices for new customers, so it is always worth shopping around year-on-year to get the cheapest car insurance deals.
When getting a new quote, you will be asked if you have a no-claims bonus. But where can you find proof of your no-claims?
All companies have a different process, but if you’ve decided not to renew, you’ll probably have to get onto them to send you proof through the post or via email.
Some companies include proof of your no-claims bonus on the letters and emails they send out to inform you of your renewal price, so even if you’re jumping ship, keep hold of it as proof to show your future provider.
Some insurers will accept a photocopy of the letter, while some will want to see the original – if this is the case, make a copy for yourself just to be sure!
What is the maximum no-claims bonus?
Some insurers will allow you to keep accruing discounts for up to 8 years, but it is typically closer to 5.
This means that, even if you’ve gone 30 years without making a claim, you’ll get the same discount as somebody who has only gone 5 years.
What happens to my no-claims bonus if I make a claim?
It is a common misconception that making a claim on your car insurance takes you back to square one as far as your no-claims bonus is concerned, but this isn’t always the case.
A claim on your car insurance will typically wipe 2 years off your no-claims, meaning that you could still be left with up to 6 years’ worth of your bonus.
But be warned, some insurers will wipe your entire no-claims bonus if you make a claim, so be sure to raise the question before committing to a policy.
What if I’m in an accident which wasn’t my fault?
Your insurer will fight your case if you do not believe that you were to blame for an accident which led to your claim. If your provider is successful in recovering the costs of any damage and compensation from the other person’s insurance, your no-claims bonus should remain completely intact.
How long does a no-claims bonus last without insurance?
If you continue to renew your insurance year-on-year, your no-claims discount will remain intact (as long as you don’t make a claim, of course!).
However, if you take an extended break from driving in the UK, you could risk losing it all – most insurers will not accept a no-claims bonus if you haven’t held a car insurance policy within the last 2 years.
For example, if you were to give up driving following a move to London – where many people use public transport instead – your no-claims discount would be invalid after 2 years.
What if I’ve built up a no-claims bonus in another country?
Some insurers will accept a no-claims bonus which has been built up in selected foreign countries, as long as you have proof of it written in English. Check with your insurer if you think this might affect you.
What is a protected no-claims bonus?
When you’re taking out car insurance, some companies will ask if you want to protect your no-claims bonus. This simply means that, if you were to make a claim on your insurance, your no-claims bonus would not be affected.
This won’t completely safeguard you from a hike in insurance premiums as insurers look at the number of claims you’ve made and any driving convictions on top of your no-claims discount.
Some insurers will also only protect your discount for a set number of claims (sometimes only 1) each year, so consider whether the protection offered by your provider is worth the extra fee.
Is a protected no-claims bonus worth it?
The answer to this will vary from person-to-person, and comes down to how much risk you are willing to take with your bonus.
Some companies will not offer protection on a no-claims bonus of less than 3 years - at which point, your savings probably wouldn’t be worth the extra money paid anyway.
If you have the maximum no-claims bonus, then protecting it could save you money in the long-run, but if you don’t make a claim, you’ll still be out of pocket.
If you trust yourself to be safe on the roads – remember, if it isn’t your fault, your no-claims will stay intact! – then it might be worth you passing on the extra protection.
Can I use my no-claims bonus on two cars?
Unfortunately, no. While a no-claims bonus does reflect your ability as a driver, it can only be used on one vehicle at a time.
Despite this, some insurers will allow you to mirror your no-claims bonus on a second vehicle if you take out a MultiCar policy with them.
Can named drivers build up a no-claims bonus?
Most of the time, it is only the policyholder who can build up a no-claims discount – if you’re a young driver looking for insurance, you will not build your no-claims as a named driver on somebody else’s vehicle.
Some insurers will allow named drivers to build their no-claims bonus as long as they remain with the same company when taking out their own policy.
Which insurance companies give a no-claims bonus to named drivers?
There are several insurers who will offer a named driver no-claims bonus to those who stick around when they take out their own policy.
Insurers offering a named driver no-claims bonus transfer include, but are not limited to:
How does no-claims work in a company car?
Some insurers will allow you to carry over the no-claims bonus that you’ve built up in a company car for future use.
You will need proof of the period of time that you have been claim-free, which can be provided to the company by the fleet manager that they deal with.
Where can I find the best deal on my car insurance?
If you’re looking to use your no-claims bonus to get yourself a good deal on your car insurance, then look no further. Bobatoo scours the UK for car insurance deals that offer not only the best service, but also the best value for money!
Get a free, non-obligatory quote with us by tapping or clicking the green button below.