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What is a No Claims Discount?
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Car insurance

What is a No Claims Discount?

It's a discount for no claims - I know. But what does that mean?

Put simply - you can earn a No Claims Discount (NCD) or No Claims Bonus (NCB) over the insurance year (12 months) by not making a claim on your policy that would result in your insurer having to pay for things like:

  • Damage to your car or someone else's
  • Damage to other property
  • Injury to you or someone else
  • Financial loss to someone

How does it work?

If you don't claim during your year's insurance, your insurer will give you a discount at the end of the year on your renewal quote.

If you stay with that insurer, the discount will be applied to another full year's insurance with them. If you decide to leave that insurer, they'll give you proof of your No Claims Discount (usually just a letter) at the end of your policy for you to give to your new insurer.

NOTE: If you have an open claim on your insurance - where fault hasn't yet been decided - you won't get any No Claims Discount you've built up until the claim is fully settled as not your fault.

How much can I save?

Other insurers will usually recognise the number of years’ discount you have built up but the percentage of discount they give does vary from insurer to insurer.

The discount you earn after the first year is often up to around 30% and you can build up your discount over the years, usually up to a maximum of 65%-75%.

If you're insured with ingenie, you can start earning a discount for good driving after just 3 months and any No Claims Discount you earn at the end of the year will be on top of that. Sounds like a good deal to me.

How long can I build up my No Claims Discount for?

The longer you go without claiming on your insurance, the better the discount you can get - usually up to at least 5 years. As long as your proof of no claims is less than 2 years old you can normally transfer your no claims record to a new insurer if you want to change.

What happens if I have to make a claim?

If you do have to make a claim, your No Claims Discount will usually be affected if your insurer has to make a payment and can’t recover their outlay from a third party, like another driver’s insurer.

That's why if you’re involved in an accident, it's really important to establish whether it's your fault and, if someone else is to blame, to make sure you get all of the details you can.

If you make a claim under your policy, your No Claims Discount will normally be put back by 2 years – so if you had 4 years’ discount it would go back to 2 years.

Can I protect my No Claims Discount?

Once you have earned 4 years’ or more No Claims Discount you can normally pay an extra premium to protect it, which means that it wouldn’t go back if you made a single claim in a year and no more than 2 claims in a 3 year period.

Can I build up a no claims discount as a named driver?

A few insurers will let you build up a No Claims Discount as a named driver but generally it can only be used with that insurer, who may not always give you the best deal. So it's usually worth having your own policy rather than getting on your parents' so you can start to build up your own insurance track record.

Never forget that if you crash as a named driver on someone else's policy, you will affect their No Claims Discount. And that won't make you very popular!

If you're learning to drive in someone else's car, you can take out an ingenie Learner policy which protects the car owners No Claims Discount from any bumps you might have.

 

If you move to a new insurer, you'll need proof of your No Claims Discount.
Some insurers give you this automatically in your renewal letter or when you leave
but it's best to check.


By

Katey Joined ingenie in 2014 and is in charge of all things social and content. She passed her driving test in 2015 and her first car is a Toyota Yaris T3 named Tyrone.