No Claims Bonus Explained: How It Works in the UK

Summary

• Each claim-free year earns a discount: After 5 years, you could save up to 70% on your premium.
• You can protect it: No claims protection costs extra but stops a claim from reducing your discount.
• It belongs to you, not the car: You can transfer it to a new insurer or a different car.

No claims bonus (NCB) is the single biggest way to reduce your car insurance cost. But it's often misunderstood.

How does it build up? Can you lose it? And is it worth protecting? Let's clear everything up.

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What Is No Claims Bonus?

No claims bonus is a discount on your car insurance premium. You earn it by not making any claims.

For each year you don't claim, you get a bigger discount. After 5 years, the discount can be 60-70% off the full premium.

It's sometimes called no claims discount (NCD) — same thing, different name.

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How Much Can You Save?

Years Claim-Free	Typical Discount
1 year	30%
2 years	40%
3 years	50%
4 years	55%
5+ years	60 - 70%

Discounts vary between insurers. Some cap the maximum at 5 years, others go up to 9 years or more.

Example: If your full premium would be £1,000 and you have 5 years NCB, you might only pay £350. That's a saving of £650 per year.

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What Happens When You Claim?

If you make a claim, your NCB is usually reduced. A typical penalty is:

• One claim: Lose 2 years of NCB (e.g. from 5 years to 3 years).
• Two claims in a year: Lose most or all of your NCB.
• Not-at-fault claim: Some insurers protect your NCB for not-at-fault claims. But not all do. Check your policy.

Losing NCB doesn't just lose the discount — your base premium may also increase because you've shown you're "higher risk."

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Is No Claims Protection Worth It?

Many insurers offer no claims protection as an add-on. It typically costs £20-£60 per year.

With protection, you can make one or two claims without losing your NCB years. This can save you hundreds if you do need to claim.

Worth it if:

• You have 4+ years of NCB (lots to lose)
• The cost is under £50
• You drive frequently and the risk of a claim is real

May not be worth it if:

• You have 0-2 years NCB (less to lose)
• The protection costs nearly as much as the discount

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Can You Transfer Your NCB?

Yes. Your NCB belongs to you, not your insurer or car. When you switch insurers, your new insurer will ask for proof of NCB.

Your old insurer provides a letter or email confirming your years of NCB. Keep this safe.

Most insurers accept NCB proof up to 2 years after your last policy ended. After that, you may have to start again.

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Tips for Building NCB

• Only claim when you need to: If the repair cost is close to your excess, it's often better to pay yourself and keep your NCB.
• Get a dashcam: Proves who was at fault, helping you avoid wrongful claims against your policy.
• Drive carefully: The safest drivers pay the least for insurance.
• Consider telematics: Black box insurance can help new drivers build trust with insurers.

For more ways to save on insurance, read our car insurance guide.

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Your no claims bonus is valuable — protect it. Every year without a claim saves you money. Drive safely, only claim when it's truly necessary, and watch those premiums drop year after year.

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