The no claims bonus — sometimes called the no claims discount (NCD) — is the single biggest lever most drivers have on their annual insurance premium. After five years of claim-free driving, most insurers offer a discount of 60–75% off the base premium. Lose it to a single fault claim, and that discount resets, often adding hundreds of pounds to the following year's renewal. Understanding exactly how it works is worth more than shopping around at renewal — though you should do both.
How the no claims bonus actually builds
Each full year without making a fault claim earns one year of no claims bonus. Most insurers offer discounts on roughly this scale:
- 1 year: 30–40% discount
- 2 years: 40–50% discount
- 3 years: 50–55% discount
- 4 years: 55–65% discount
- 5 years: 60–75% discount
- 6+ years: many insurers cap at 5 or 6 years; some offer further discounts up to 9 years
The discount applies to the base premium, not the final quote. An insurer quoting a base rate of £1,200 with a 65% NCD gives you a post-discount premium of £420 before other adjustments. Each insurer sets their own discount percentages, so the same five-year NCD is worth different amounts with different providers — the number of years travels with you when you switch; the discount percentage doesn't.
For new drivers who haven't yet accumulated any NCD, the fastest route to building it is a clean year on a low-cost policy — often a telematics product where the premium's lower enough to feel manageable while you build. Every year without a fault claim compounds. That first year's the most impactful in percentage terms; by year five you're in genuinely good territory.
What a claim does to your NCD
Making a fault claim typically reduces your NCD by two years. So a five-year NCD becomes a three-year NCD at the following renewal. Making a second fault claim in the same year often brings it down to zero.
There are two systems insurers use after a fault claim:
- Step-back: Your NCD drops by a set number of years (usually two). This is the most common approach. Five years becomes three years.
- Full reset: Some insurers drop your NCD to zero after any fault claim, regardless of how many years you've accumulated. This is less common but worth checking before you buy — it's in the policy terms.
A non-fault claim — where you're hit by another driver and successfully recover costs from their insurer — shouldn't affect your NCD. In practice, it can still affect your premium if your insurer flags you as statistically higher risk. People who've been in non-fault accidents are statistically more likely to be in future accidents, and some insurers price for that. This is legal but frustrating. If a non-fault claim is affecting your renewal quote, shopping around is usually the most effective response.
A windscreen claim under the separate windscreen cover included in most comprehensive policies doesn't affect NCD. Get the crack filled or screen replaced through your insurer's scheme without worrying about your bonus.
No claims protection: what it does and doesn't cover
No claims protection is an add-on that typically costs £25–£50 per year and prevents your NCD from being reduced after one fault claim in a policy year. Here's how it usually works:
- After one fault claim: NCD is preserved at its current level at renewal
- After two fault claims in one year: NCD is reduced (protection typically covers only one claim per year)
Here's what most people don't know, and what makes protection less valuable than it sounds: it doesn't protect your premium. Your insurer can and will increase your base premium at renewal after a fault claim, regardless of whether your NCD is protected. The discount percentage applies to the new, higher base — which is why drivers are sometimes surprised to see their renewal go up significantly even with protected NCD. The NCD is intact; the base it applies to has risen because you're now statistically higher risk in the insurer's model.
Whether protection's worth buying depends on your premium and your risk profile. For someone paying £900 per year with five years' NCD, protection is probably worth it — the cost of losing two years' bonus at renewal is likely to exceed the £30–£50 protection cost. For someone paying £350 with two years' NCD, the maths is less clear. Do the calculation for your specific situation.
Transferring NCD when you change insurer
Your NCD belongs to you, not to your insurer. When you switch, request proof of NCD from your current insurer before the policy expires — this is typically a letter or document confirming how many years of claim-free driving you have. The new insurer will ask for it. Some insurers accept renewal notices showing the NCD; others require a specific proof document. Don't assume your old insurer will send it automatically — request it explicitly, and keep a copy.
European NCD is accepted by some UK insurers and rejected by others. If you've driven abroad without a claim and want that history recognised, ask each insurer directly — there's no standard approach and the answer varies.
NCD on multiple cars and mirror NCD
Standard NCD is earned on one car at a time, on one policy. Most insurers won't let you use the same NCD on two policies simultaneously — you can only be the main driver of one car. However, several insurers offer multi-car NCD products where separate NCD tracks are maintained for each vehicle on a combined policy. If there are two or more cars in your household, this is worth comparing against separate policies — the pricing advantage varies by insurer but can be significant.
Some insurers also offer "mirror NCD" products where an experienced driver's NCD is used to anchor a young driver's policy. This is distinct from fronting — the experienced driver genuinely owns the NCD and the young driver is the main policyholder. It's worth asking about if you're a new driver whose parent or partner has a long NCD history.
After a claim: what to actually do
If you're in an accident, document everything at the scene — the other party's name, address, vehicle registration, and insurance details. Take photos of the damage, the road position of both vehicles, and any road markings or signs. Even if you're clearly not at fault, do this before any vehicles are moved.
Report to your insurer even if you don't intend to claim on your own policy. Failure to report known accidents can void your coverage — most policies include a notification requirement regardless of fault. Reporting an incident isn't the same as making a claim.
Before making a claim, do the maths: the repair cost versus what making a claim will cost you over the following three years. A £600 repair might be worth paying yourself if losing two years of NCD adds £400 per year for three years — that's £1,200 in additional premium for a £600 repair. The calculation varies significantly by insurer and your current premium level, but it's always worth running before you trigger a claim. Call your insurer and ask what the impact on your renewal would be — they're required to tell you.