{"id":127781,"date":"2017-08-23T10:27:55","date_gmt":"2017-08-23T17:27:55","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=127781"},"modified":"2025-04-15T10:00:51","modified_gmt":"2025-04-15T09:00:51","slug":"no-claims-bonus","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/car-insurance\/no-claims-bonus","title":{"rendered":"Car insurance no-claims bonus"},"content":{"rendered":"

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 bigger the discount you\u2019ll be eligible for on your car insurance premiums? We explain how car insurance no-claims bonuses work and how you can use them to get the best value on your car insurance.<\/p>

What is a car insurance no-claims bonus or discount?<\/h3>

A car insurance no-claims bonus, or discount, is a percentage discount on your car insurance premium. You get it in exchange for not making any claims for at least a year of driving. The more years that go by without your insurer having to pay out for a claim, the bigger the discount you\u2019ll qualify for \u2013 up to a maximum limit.<\/p>

It\u2019s a bonus that makes sense. Car insurance claims can be very expensive for insurers, particularly if an accident that you\u2019ve caused damages someone else\u2019s vehicle as well as your own. If having you as a customer doesn\u2019t cost an insurer money, it can afford to reward you with a discount.<\/p>

An important point to make upfront: There are lots of risk factors other than claims history that affect your insurance premium each year. A no-claims bonus is only a discount on your baseline premium. It\u2019s not a guarantee that you\u2019ll see costs go down year-on-year.<\/p>

How do I build my no-claims bonus?<\/h3>

Good news \u2013 if you hold an annual car insurance policy, you don\u2019t need to proactively do anything to start building a no-claims bonus. Each year you hold car insurance and don\u2019t make a claim, the bonus builds up automatically. In theory, all you need to do to keep that annual bonus ticking up is to not make a claim.<\/p>

If you do make a claim, you may well lose some or all of the bonus you\u2019ve built up.<\/p>

Another piece of good news, though. Generally, your discount won\u2019t be reduced for claims where you were not at fault. So if, for example, you are involved in an accident with another car and the other driver admits fault, most insurers won\u2019t reduce your no-claims discount.<\/p>

The exact types of claim you can make without losing your discount will be different depending on the insurer.<\/p>

What is the maximum no-claims bonus I can get?<\/h3>

Most insurers cap the number of years you can build up a no-claims discount for. This typically ranges from 5\u201315 years depending on the insurer. Once you hit the limit, the level of discount will stop increasing.<\/p>

The maximum discount will also vary \u2013 though a higher cap on the number of years doesn\u2019t necessarily mean a bigger discount. This is because different insurers increase the level of discount at different rates. The rate of increase isn\u2019t necessarily linear, either. You may get bigger discount increases in the first few years than you will further down the line, for example.<\/p>

According to the Association of British Insurers<\/a> (ABI), if you\u2019ve managed to go 5 or more years without making a claim, you could save up to 60% on your premium. Even having just 1 year\u2019s no-claims bonus could shave off up to 30% the following year.<\/p>

What type of claims affect my no-claims bonus?<\/h3>

Put simply, \u201cfault\u201d claims will affect your no-claims bonus and \u201cnon-fault\u201d claims typically won\u2019t.<\/p>

Unfortunately, it\u2019s not quite as simple as this insurance jargon suggests. Being at \u201cfault\u201d doesn\u2019t necessarily mean you caused an incident. Usually, it\u2019s to do with whether or not your insurer has to pay. Say a careless driver scraped your parked car. Unless they could be traced and their insurer made to pay, your insurance claim would likely be a \u201cfault\u201d claim.<\/p>

Meanwhile if you are involved in an incident with another driver where liability can\u2019t be agreed, and insurers share costs, you may both be marked down as \u201cat-fault\u201d.<\/p>

Fault claims, unlike non-fault claims \u2013 where your insurer doesn\u2019t pay out \u2013 usually reduce your no-claims discount.<\/p>

There are some exceptions to this rule though. For example, some insurers won\u2019t reduce your no-claims discount if you were involved in an accident caused by an uninsured driver. And many insurers won\u2019t apply penalties following glass damage.<\/p>

How can claims affect my no-claims bonus?<\/h3>

If you\u2019ve built up several years of no-claims discount, a fault claim won\u2019t necessarily see it fully wiped out. Many insurers will reduce the number of qualifying years after a single claim. However, a second claim in quick succession could bring you back to zero \u2013 or perhaps a year or 2 if you had 5 or more years of no claims to start with.<\/p>

The table below gives an idea of what typically happens to your bonus after 1 or 2 claims in an insurance period.<\/p>
NCD years at outset<\/th>Number of claims in insurance period<\/th>NCD years after claiming<\/th><\/tr><\/thead>
9 years<\/td>1<\/td>3 years<\/td><\/tr>
9 years<\/td>2<\/td>1 year<\/td><\/tr>
5 years<\/td>2<\/td>1 year<\/td><\/tr>
5 years<\/td>2<\/td>1 year<\/td><\/tr>
3 years<\/td>1<\/td>1 year<\/td><\/tr>
3 years<\/td>2<\/td>0 years<\/td><\/tr><\/tbody><\/table>

What is a no-claims bonus worth?<\/h3>

A good no-claims bonus is well worth having. It can see you paying much less than you would otherwise. But the biggest percentage discount is only worth having if the underlying price is right. As the table below shows, a 40% discount on a \u00a3500 premium will see you paying more than a 30% discount on a \u00a3400 premium.<\/p>
<\/th>Insurer 1<\/th>Insurer 2<\/th><\/tr><\/thead>
Baseline premium<\/th>\u00a3500<\/td>\u00a3400<\/td><\/tr>
No-claims discount %<\/th>40%<\/td>30%<\/td><\/tr>
Amount of discount<\/th>\u00a3200<\/td>\u00a3120<\/td><\/tr>
Premium after discount<\/th>\u00a3300<\/td>\u00a3280<\/td><\/tr><\/tbody><\/table>

So don\u2019t be swayed into choosing, or staying with an insurer just because it markets a high no-claims discount percentage. Compare quotes based on your circumstances, including your years of no claims. Opt for the most affordable policy that meets your needs.<\/p>

Should I claim for minor damage?<\/h3>

If the damage from an incident is very minor \u2013 a paint scratch or a dented bumper, for example \u2013 it might be worth paying for the repairs yourself rather than claiming. There are a couple of reasons for this:<\/p>

  1. The cost of repairs may only be a little higher than your insurance excess, so making a claim wouldn\u2019t get you much of a refund.<\/li>
  2. The negative impact on your no-claims bonus could mean your premiums rise a fair bit when you renew.<\/li><\/ol>

    You should still tell your insurer about any accidents, even if you don\u2019t make a claim. If you don\u2019t tell your insurer, but it later finds out about the accident (perhaps because you need to make a claim for more major repairs and the mechanic spots the previous patch-up), it could invalidate your car insurance.<\/p>

    The benefits of not making a claim<\/h3>

    The table below shows how an increasing number of claim-free years can help keep your car insurance premiums down. We\u2019ve shown 2 scenarios for the same driver. Each of our 2 hypothetical insurers offers different baseline premiums and different levels of no-claims bonus.<\/p>

    We\u2019ve assumed that the baseline premium increases by 5% each year to take account of inflation and other external factors. In practice, external factors and changes to a driver\u2019s personal circumstances (such as where they live or the car they drive) may affect baseline premiums more dramatically.<\/p>