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No Claims Bonus and No Claims Discount Explained


What is a no claims bonus?


A no claims bonus refers to a big discount on your vehicle insurance premium provided that you have not made any claims over a certain number of years. The discounts range from 30% to 80% and get bigger year-after-year as a way of rewarding those that do not make a claim. With such big discounts available, they make a huge difference to the amount you pay for your policy.


You would typically make a claim for any damage to your vehicle, whether you are involved in a road accident or have been the victim of vandalism, fire, flood or theft. However, if you avoid making a claim, you are not causing the insurer to pay out anything and therefore you are not costing them any money. As a way of thanking you, they can gladly give you a hefty discount. No claims also assume that you are a safer driver, slower driver or more cautious since you avoid accidents and again, this is something that insurers want to reward. 

What is an introductory no claims bonus?

Some insurers will offer an ‘introductory’ no claims bonus which means that you can still receive a discount of 30% to 40% in your first year, despite not having any history. This is used as an incentive to attract new customers and to be eligible, they cannot make a claim in the first year. Those with a ‘zero no claims bonus’ may be looking for something like this, maybe because they have made previous claims or they are a new driver.

What is an accelerated no claims bonus?

There are some insurance providers that can give you an accelerated bonus which means that you can receive the discount after 9 or 10 months instead of 1 year. This is another way to attract new customers and means that you can make a saving as a new customer provided that you do not make any claims.

Can I move my discount to another insurer?

Yes, absolutely. The discounts are portable and can be transferred to another insurer. It is common to seek a new insurance provider and policy every year to get a better rate. So provided that you can show proof of your no claims discount from the insurer, your next insurer will maintain it. The proof required includes:

  • Driver name
  • Vehicle information
  • Policy dates
  • History of claims

If I make a claim, is my discount ruined?

It would be a shame to lose your discount, especially if you have worked hard to avoid claims for as long as 5 years. However, most insurers will still honour some kind of discount even if you have to make a claim. Depending on the insurance company, they may allow you to make one claim a year and still keep your discount intact or they may put your discount down e.g from 5 years to the 3-year level.

Can I use my NCB for more than one vehicle?

Usually, you cannot use your no claims bonus for more than one vehicle, however, there are some particular insurers that do. Especially if you have a second car which you share with family members or a spouse, there may be a way for you both to receive a discount on your car insurance – so it is worth asking your insurer.

Can I use my bonus abroad?

Yes, most of the insurance providers with work with will accept your no claims bonus if you wish to drive abroad or move countries. You must have a letter of proof from your previous insurer confirming the name of the driver, discount, vehicle information and dates of being insured. The no claims bonus will be honoured in EU countries and also those of the EEA including Australia, South Africa and the US. See list of eligible countries here.

Can I use my discount for commercial vehicles?

It is unlikely that your discount for your own private vehicle can be transferred to a commercial vehicle like a van or a lorry. However, if it is the transition from a private vehicle to company car insurance, this is more likely to be accepted by the insurer.

Can my discount be passed onto other drivers?

No, your no claims discount cannot be passed onto other drivers otherwise this privilege could be abused by customers. You can, however, share a vehicle with another person and your NCD can still apply. But, you must be careful because if the other driver has an accident and needs to make a claim, it can negatively affect your bonus.

Fortunately, there are some policies where named drivers can build up their own bonus. This can be great for new and young drivers who do not have their own vehicle yet but will be eligible for a big discount when they do.

How to protect your no claims bonus

Since the potential savings are so huge, you can get insurance to protect your no claims discount. This comes at an extra 5% to 10% cost of your annual premium but it can be worth it considering the savings you can make. Please find an example from The Guardian:


It is noted though, that there is a law of diminishing returns and the longer you protect it, the smaller amount you save each time.

Other savings factors

Whilst your no claims bonus is probably one of the biggest factors that can help you save on your vehicle insurance, there are certainly others that come into play. This includes adding safety features to your vehicle such as locks, immobilisers, trackers and keeping it in a garage overnight. For multiple vehicles, policyholders can look at purchasing insurance in a fleet which allows you to save money for every extra vehicle you insure and this is what we specialise in.

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