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No Claims Bonus Explained

A no claims bonus or no claims discount (NCD) refers to the huge discount of up to 80% that you can receive on your car insurance if you can sustain long periods without making a claim to your insurer.

You would typically make a claim to your insurance company to help you pay for any damages or repairs if you and your vehicle were in involved in a major road accident, fire, flood or theft.

However by not making a claim, you are not costing your insurance company anything, as they do not have to pay out for any damages or repairs on your vehicle. Also, by driving claim-free for a number of years, it assumes that you are a safe driver because you haven’t got into any major accidents or you are low risk for the insurance company i.e you have low mileage, drive in safe areas etc.

How does a No Claims Bonus work?

The way a no claims bonus works is that you receive an additional discount for every 12-month insurance period that you drive claim-free. Typically calculated on an annual basis, a no claims discount (NCD) can accumulate year upon year to a discount of 40%-80% as per the example below:

  • 30% for 1 year’s NCD
  • 40% for 2 years’ NCD
  • 50% for 3 years’ NCD
  • 60% for 4 years’ NCD
  • 65% for 5+ years’ NCD

All insurance companies offer a different discount based on the number of years you drive claim-free. Some of the insurers we work with at Call Wiser allow further discounts after 6-8 years, but the majority of insurers in the UK offer the maximum discount after 5 years. Some insurers promote an introductory offer of 80% discount for new customers provided you have 8 years of no claims. Every insurer has different discounts available.

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What happens to my no claims bonus if I need to make a claim?

If you have worked hard to accumulate no claims for a number of years, it would be terrible to get in an accident and need to make a claim thereby losing your discount. Fortunately, some insurers allow you to make up to two claims that are your fault and still keep your no claims bonus in tact. More stringent insurance companies may reduce the years off your discount. For example, if you had a 5-year no claims bonus but needed to make a claim, the insurer could reduce your bonus to 3 years and you would receive the discount at this level.

How to protect your no claims discount

Protecting your no claims bonus is very important because there are huge savings at stake. Some insurers will give you the options to protect your no claims bonus but this may cause a 5-10% increase in the cost of your insurance premium, or more (Source: The Telegraph).

For accidents that weren’t your fault e.g another car hits you, although you need to make repairs to your vehicle, it will not affect your no-claims bonus if you can prove that the accident was not your fault. Similarly, some insurance companies may provide leniency on your no claims bonus if your car has been stolen or your vehicle was damaged as a result of bad weather.

One of the most crucial things you can do to keep your no claims bonus in tact is to avoid making claims. Obviously being a slower and more cautious driver will prevent accidents in the first place. However, for any minor bumps or scratches on your car, it could be worth paying this out of your own pocket so that you don’t have to make a claim. The potential discounts that you can earn by not making a claim are so significant that it might be best to pay the garage or mechanic without getting your insurance involved.

Does more than one driver on the policy affect your no claims bonus?

Two or more people cannot share a no claims bonus. So if you have a multi car insurance policy, the discounts only apply to the main driver and their vehicle.

If you have ‘named drivers’ on the policy, as in other people on your policy that are allowed to drive your car, they cannot build up their own no claims bonus history because this could lead to other people driving on their behalf and taking advantage of the system. There are a few insurers which allow named drivers to build up a no claims history, you will simply need to ask one of our staff members for more information.

Can I use my no claims discount on more than one vehicle?

Typically you cannot use your no claims discount for more than one vehicle. However, we work with some specialist insurance providers that can match your discount for a second vehicle. So this would be ideal if you have a policy with your spouse or family members so that you can both receive a discount on your car insurance.

In addition, if you have been a driver in a multi car policy, been a named driver or have driven a company car, you may be eligible for an introductory offer when you apply for a new insurance policy with us.

Can I keep my no claims bonus when I change policies?

Yes, you can keep your no claims bonus when changing insurance policies because they are portable. It’s very common to switch policies at the end of the year to see if you can get a better deal elsewhere. You may need to show proof of your no claims discount by requesting a letter from your previous insurer.

However, if you want to transfer your no claims bonus, you cannot switch insurers in the middle of the year, you have to wait until the year is up. If you cancel your policy, your need to use up your no claims bonus within two years otherwise it expires and you will be forced to start from scratch.

Can I use a no claims discount that I received overseas?

Yes, most of the insurance companies we work with will honour your no claims discount if you have received it overseas. You must provide a letter of proof from your previous insurer including the name of the driver, vehicle, discount and policy expiration. Overseas NCDs will only be honoured from countries that are from the European Union and European Economic Area including Australia, South Africa and USA.

Can I use my no claims bonus on commercial vehicles?

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Most insurers will not accept No Claims Bonus from a private car policy to be used on a commercial vehicle policy. However, if you have a company car, it is likely that you will be able to accumulate a no claims bonus and take advantage of the potential discounts available on your car insurance. As always it’s better to talk, Call Wiser works with over 30 of the top UK insurers, if you are looking to use No Claims Bonus on a commercial vehicle talk to our experts see how we can accommodate your needs.

Using your No Claims Bonus with Call Wiser

At Call Wiser, we work with a number of leading insurance companies in the country and if you have a no claims bonus available, we can help you find the right insurance company and make a huge saving on your car insurance premium. In fact, there are some insurers we know that have accelerated policies to help your reach the discounts sooner.

Even if you have been unlucky and have made a number of claims in the past, we can still provide very competitive rates for those with a zero no claims bonus.

Our dedicated team of insurance experts is based in Andover, Hampshire and they are ready to take your call. Simply call us today for free on a landline or mobile on 0333 003 3270 to speak to one of our friendly advisors today.


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