Car insurance no-claims bonus

What is a no-claims bonus and what should I know about it?

Making an insurance claim is sometimes necessary to cover the costs of damages or injuries after an accident.

But did you know that the longer you go without making a claim, the more likely it becomes that you’re eligible for discounts on your insurance costs? Read on to find out how these kinds of discounts work, and how you can use them to get the best value on your car insurance.

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The problem with no-claims discounts

The key to cheap car insurance is to shop around, and take your business elsewhere if you find a better deal. A no-claims bonus can get in the way of this. If you’ve worked hard to grow your discount, then you might find it harder to switch to an insurer that will recognise your discount the same way. This means your insurance options are a lot more limited.

If you can find better value elsewhere, then a no-claims bonus might be holding you back and actually leading to higher premiums than what you could get by shopping around. Either way, it pays to know what your options are and what other deals are out there.

How does the no-claims bonus work?

A no-claims bonus works like this:

  • Each year you hold car insurance and don’t make a claim, you might become eligible for a discount.
  • Some insurers refer to a no-claims bonus as a no-claims discount

Generally, your discount won’t be reduced for claims where you were not at fault. This means you can still make weather-related claims or accident claims where the other driver was clearly at fault without losing your no-claims bonus.

The exact types of claims you can make without losing your discount will be different depending on the insurer, so it’s a good idea to look at this if you’re planning on building a no-claims bonus up over a number of years.

When you switch car insurance, it’s also worth looking at whether your new insurer will recognise your no-claims bonus and clean driving record.

If you’ve managed to go five or more years without making a claim, you could save up to 60%, depending on your insurer. These savings can vary each year too but even having just one years’ no-claims bonus could shave off up to 30% the following year (data from The Association of British Insurers).

What kinds of claim-free discounts are there?

Because discount types and terms vary between providers, we’ve outlined a couple of different ways you can get a discount for keeping your claims to a minimum. Not all kinds of discounts are available everywhere in the UK. To find out if one of these discounts is available to you, contact your provider, or include these discounts in your must-have list when you’re shopping for a new policy.

Experienced or safe driver discount

With this kind of discount, you’ll get a rate break as long as you’re not involved in any accidents.

This kind of discount also allows for claims not related to safe driving, such as theft, vandalism or inclement weather damage like hail and lightning, without affecting your eligibility for a safe driver discount.

No claim bonus or no-claim discount

Some companies will give you a discount off your premiums if you maintain your policy with no accidents or claims for five years. This is the most direct kind of claim-free discount, but it also takes multiple years of safe driving and unbroken cover with the same insurer to qualify.

Is a no-claims bonus worth it?

One of the big questions to ask yourself before taking out car insurance is whether you even want to bother with the no-claims bonus.

It’s a discount, but the obvious downside is that you’ll risk losing it if you have to make a claim, so it might stop you from getting full use out of your car insurance. However, there’s another sneaky downside too.

Car insurance providers with claim-free discounts

These providers give discounts to their customers, in one form or another, based on how long a driver goes without making a claim.

  • AA: Drivers won’t lose their no-claims bonus if they have an accident that isn’t their fault yet the other driver is uninsured.
  • Admiral: Drivers could save up to 13% having built up just one years’ no-claims bonus. You can then choose to pay an optional extra to protect your bonus if you reach five years without making a claim – then you stand to save 43% if you reach nine years without a claims.
  • Direct Line: Drivers that reach four years and make only one claim would be eligible to buy no-claims discount protection.
  • Endsleigh: Drivers can build up a no-claims bonus for up to nine years.
  • Go Girl: Drivers can earn a no-claims discount if they don’t make any claims during any one year – and can protect the discount if they reach five years with no more than two claims.
  • Ingenie: Drivers that choose to protect their no-caims bonus can make up to two claims in three years.
  • M&S Bank: Drivers involved in an accident with an at-fault and uninsured driver will not lose their no-claims bonus. Drivers may also pay to protect their discount, which covers two claims over a three-year period.
  • RAC: Drivers with four or more years’ no claims bonus can pay to protect it, allowing them to make up to two claims in three years.

Is it worth paying to protect a no-claims discount?

A protected no-claims discount is an extra-cost option you can add to your coverage. It works differently depending on the insurer, but generally it will let you make up to two claims without losing your no-claims discount.

Your insurer will typically offer this once you’ve been with them for at least two years without a claim.

Whether you choose to get it is entirely up to you, but you should note the following:

  • This feature simply protects your discount, and your premiums are still going to increase following a claim.
  • It makes your car insurance more expensive since you are paying to keep a discount.
  • It’s only available when you stick with the same insurer for a while.

Like the no-claims bonus itself, this feature encourages people to stick with the same insurer rather than shop around.

For a fairer comparison, you might want to factor this into the prices when you’re comparing car insurance quotes.

If protecting your no-claims discount means you’re paying more for car insurance than you would with a provider that doesn’t offer this discount at all, then it might be time to make a switch.

Pros and cons of using a no-claims bonus

The good
  • Can get you a significant discount
  • Can be protected with various coverage options
  • Will not necessarily be lost if you have to make a no-fault claim
The not-so-good
  • Might prevent you from effectively shopping around or accessing other discounts
  • Limits the range of policy types, options and insurance brands available to you
  • No-claims protection options come at an extra cost
  • Policies that feature a no-claims discount are not necessarily the most cost-effective options
  • Even with a protected no-claims bonus, your premiums are still likely to increase following an accident
  • You lose your no-claims bonus after going for an extended time without car insurance

Bottom line

If you’re a safe driver who’s had no claims or accidents in years, you deserve to save money on your premiums.

But when it comes to discounts for staying claim-free, not all providers are created equal — and by comparing the discounts of several insurance companies, you could find a truly great value on your coverage.

Visit our comprehensive guide to car insurance to learn more about car insurance, including policy terms, coverage options, rates and discounts.

Frequently asked questions

The offers compared on this page are chosen from a range of products we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations), aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When making a big financial decision, it's wise to consider getting independent financial advice, and always consider your own financial circumstances when comparing products so you get what's right for you.
*51% of consumers could save £200. To get this figure, aggregator Seopa selected quotes from popular providers and others, weighting according to market share, and compared the cheapest with the cheapest on its system. Your savings will depend on your own circumstances.
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