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The Benefits of Building Your No-Claims Bonus

A no-claims bonus can reduce the amount you pay on your insurance premiums.

What is a no-claims bonus?

No claims bonus or NCB for short, is essentially a count of how many years you have been insured but having had to make a claim on your policy.

The size of the discount you are entitled to varies from insurer to insurer but, a NCB of five years or more is likely to entitle you to a significant discount on your insurance cover.

No-claims bonus can be accrued on many different insurance products including policies for car insurance cover, trade insurance and even buildings and contents insurance.

How do you accrue a no-claims bonus?

It’s straightforward to accrue a no-claims bonus, as for every year you are insured without making a claim on your policy, you will earn an additional year’s NCB. Some insurers offer something called an accelerated no claims bonus scheme, where you can earn a year no claims bonus in 10 months rather than 12.

There is no limit to how many years bonus you can build, but the vast majority of insurers will only use a maximum of five years when considering how much discount to offer you.

What if you need to make a claim, how does it affect your NCB?

If it is necessary for you to make a claim on your policy which results in your insurer making a payment to you, it is likely you will lose come, or all of your no claims bonus.

However, if you are having to claim and a third party is as fault, so longer as your insurer agrees that you weren’t to blame, your insurer may be able to reclaim their losses from the other insurer. In this situation, your no claims bonus shouldn’t be negatively affected.

If you purchase a new policy with a reduced NCB and later on you are found not to be at fault, often insurers will allow you to use your full reinstated no claims bonus and refund you the extra you paid on your insurance premium.

How to get proof of your no claims

When it is time to renew your insurance, if you change insurer you will need proof of your no claims bonus to transfer your discount entitlement over to the new insurer.

Your current insurance may include proof of your no claims bonus in the insurance renewal letter they send you before your insurance is due to expire – so it might be a good idea to hang onto this as you may need to show it to you new insurer if you decide to switch providers.

If you do decide to switch insurers, you may receive proof of your NCB in the post with the cancellation letter from you previous insurer.

However, some insurers will not include it in their paperwork which means you will need to request proof of your no claims bonus from them. Usually you can do this by telephone but, you may be required to write to them or fill in a form on their website.

What are protected no-claims bonus?

If you decide to protect your NCB it allows you to have a certain amount of accidents that your insurer would deem your fault without negatively affecting your bonus. For example, if you had an accident your NCB remains unaffected even if your insurer is unable to claim back their costs. Each insurer will have different rules in respect to how many claims you can make.

It is important to remember that this won’t always stop your premiums increasing after you have made a claim as insurance companies use your claim history to calculate how much you should pay, with your discount been calculated thereafter.

Any leftover no claims bonus may lower the amount you have to pay for your new cover but, there is no guarantee that it will be less than you paid last year.

What happens if you change vehicle or policy? Can NCB be used on two cars?

It is possible for your no claims bonus to be transferred from one car to another, but if you decide to change insurers before the end of the year, you will not qualify for the NCB for that year. Unfortunately, it is not possible to use a no-claims bonus on more than one car.

It is now common practise for insurers to provide you with proof of no claims entitlement at the end of the year. You can then send this to your new insurance provider when you switch.

Many insurers will provide your proof of no claims in your end of year renewal letter, failing that, you can always call your insurer and ask them to send proof to you.

If you decide to cancel your insurance cover, you only have two years to reuse your no claims bonus otherwise it will expire and you will have to start again with zero.

Are named drives entitled to NCB?

In most cases named drives are not able to build up their own no claims bonus as it is the main insured party careful driving record that the claim free history will be supporting.

If all insurers were to allow named drivers to earn their own NCB this would effectively leave a loophole open to be exploited, as you could build up your NCB without ever having to drive the car.

However, with that said, there are a small and ever-growing number of insurers you will offer NCB for named drivers but, they cannot guarantee that the NCB will be recognised by other insurance companies.

Does NCB apply to commercial vehicles?

Fleet vehicles and commercial policies don’t normally allow you to accrue NCB, but a small number of insurers will take into consideration your claims history when driving a company car when calculating your insurance premium.

If you have social, domestic, pleasure and commuting cover, then it is likely that you would be able to build a healthy no claims bonus in this way. If you are unsure, it is always worth a quick phone call to your insurer to make sure.

Can you transfer your NCB from a company car?

If you no longer have a company car, in most cases you should be able to use any no claims entitlement built up on that policy.

However, the NCB may only be transferable if you were specifically named on the company’s insurance policy for a particular car and that car was solely for your use.

Usually when you are looking to change your insurance provider, you will need written confirmation of your no claims discount from your last insurer. However, with company policies, many insurers will accept written confirmation from your employer.

Can I use NCB earned overseas?

It never hurts to ask; however, the majority of UK insurance companies do not allow NCB that has been accrued overseas to be transferred onto a UK insurance policy. This is due to the driving laws differing from country to country, and the additional administration involved.