No Claims Bonus Explained

A no claims bonus is a discount applied to your car insurance premiums after consecutive years of driving without claiming on your policy. The more years that you’ve gone without claiming, the more discount you’ll get.If you own and/or drive a car, you’ll be familiar with the fact that it is a legal requirement to get the appropriate insurance, to protect both you and/or a third party in the event of theft, damage, or an accident. This is an expense that all car owners must factor into their annual budgets, but following consecutive years of not claiming, you can enjoy lower insurance premiums. 

In terms of the discounts you can get in relation to the years of no claims bonus that you have earned, this will vary depending on the insurer that you go for. However, you could be looking at around 30% for one to two years without claiming, and as much as 60-70% for five years. 

What affects your no claims bonus? 

The good news is that even if you do have to make a claim and your insurance provider pays out, you won’t typically lose all of your no claims bonus if you’ve built up, say, 5 years or more - you’d only lose two or three for one claim. However, a second claim could see you start back at 0 again.

In all cases, we’d strongly recommend reading the small print of any insurance provider when it comes to their approach to no claims discounts. This means that your expectations are managed if you have to make a claim on a policy you take out with them.  

Can I get proof of my no claims bonus? 

Many insurance providers will automatically provide proof of your no claims entitlement if you choose to end your policy and not renew, or on your renewal documents if you choose to stick with them. In some cases though, you’ll have to get in touch with them to request that they send proof of your no claims discount, usually in the form of a letter or email. 

You have earned your no claims bonus, so you are entitled to proof, regardless of whether you’re sticking with the insurance provider you earned it with. 

What does protecting your no claims bonus mean? 

Some insurance providers and policies allow you to protect your no claims bonus, which is something you may feel tempted to do if you’ve built up several claim-free years - and it’s worth it. 

It will likely cost you a little extra on top of your premium, but it means that if you do have to make a claim, you can still confidently lay claim to your existing no claims bonus. 

However, it’s important to note that the claim will still stand, and you must still declare any claims made to future insurance providers. A protected no claims bonus is no guarantee that your current or new provider won’t ask for higher premiums in light of your claim. 

Weigh up how much you’d likely be saving by not protecting your no claims bonus, vs the extra in premiums that you’d have to pay if your no claims discount was reduced or taken away. 

What happens if you don’t protect your no claims bonus? 

If you don’t protect your no claims bonus, you will lose some or all of your no claims discount if you have to make one or more claims on your insurance. 

Will my no claims bonus expire? 

Your no claims bonus doesn’t expire unless you’re uninsured for a long time - two years, for example. Providing you stay insured on a vehicle, your no claims bonus still stands. 

Can I take my no claims bonus with me to different insurers?

Yes! You can. By requesting proof of your no claims bonus from your current insurer if it isn’t automatically provided, you can confidently use your no claims entitlement to earn yourself a discount elsewhere. Getting a cheaper deal on car insurance is all about shopping around.