What is No Claim Discount and how does it work?
Also known as No Claim Bonus, No Claim Discount is designed to reward you for claim free years on your car and van insurance.
So what is it?
In short, it’s evidence of how many years you’ve held car or van insurance in your name without making a fault claim. Generally, windscreen claims don’t count against you and some insurers will offer perks like saying certain other claims won’t count either, such as vandalism or if your car or van is hit by an uninsured driver. An accident caused by someone else who your insurer can recover costs from are OK too. At the end of each policy year without a fault claim, your insurer will normally add on an extra year to your No Claim Discount and confirm it on your renewal invite.
Why do I need it?
When you’re getting quotes for your car and van insurance you’ll be asked how many years No Claim Discount you have. The more you have, the cheaper your quotes are likely to be. More often than not you’ll be asked to submit written proof of your No Claim Discount so be sure to only base your quotes on what you can legitimately evidence when asked.
What if I don’t have any?
Everyone has to start with zero at some point, and it’s still possible to get competitive quotes when you’re first starting out. If you’ve spent time as a named driver on another policy and not made a claim, you may get a discount off your own policy from that insurer. Their quote system on their website will ask you for details of the other policy if it’s something they offer.
Can I use NCD from a company car or taxi?
When you’re getting your quotes you’ll normally be asked where you earned your No Claim Discount. If there’s an option listed that you can provide proof of upon request make sure you use it.
Is there a maximum amount of No Claim Discount I can earn?
We’ve seen some insurers accepting upwards of 20 years No Claim Discount, though in reality you’re unlikely to see any meaningful difference in the amount you pay once you get to 9 years. The amount of discount you get will vary greatly from one insurer to another, and just because they may advertise a high percentage discount that doesn’t necessarily translate to cheaper quotes as the base premium could have been much higher to start with!
What if I make a claim, do I lose all my No Claim Discount?
After each fault claim (basically any claim that’s your fault, other than windscreen and insurance policy-specific excluded claim types) the insurer will apply what’s known as ‘step back’ and usually that means knocking two years off your No Claim Discount, even if it was one of your named drivers’ fault rather than yours. If you only had one or two years to start with you’ll go straight back to zero from your next renewal after just one claim.
What about protecting my No Claim Discount?
Once you reach a certain number of years No Claim Discount - typically 3 or 4 years - insurers will start offering to protect your No Claim Discount. No Claim Discount Protection as it is commonly known is essentially insurance on your NCD. In return for an extra premium the insurer will allow you to make a certain number of claims without docking any of your NCD. Bear in mind though that No Claim Discount Protection rarely protects the premium you pay - just the number of NCD years you can use on your next policy - so your price can still go up after a fault claim even with No Claim Discount Protection.
Does my No Claim Discount expire?
Your No Claim Discount is evidence of your careful claim-free driving so it needs to be recent in order to be valid. If you have a period without a car to use your No Claim Discount, most insurers will allow a gap up to two years before they’ll say it’s expired and can’t be used. However, if you've not used your No Claim Discount due to being posted overseas with the armed forces, some insurers will extend the validity to three years. If you go back to the insurer you last used, they would typically allow you an extra year as a sweetener to go back to them but it's not guaranteed. You can always leave again once you get your next renewal if there’s a better deal elsewhere.
Can I use my No Claim Discount on more than one car at a time?
No Claim Discount can generally only be used on one car at a time. So if you have two cars you’ll need to build up two sets of No Claim Discount. A multi car policy may be of benefit here so give them a try, and don’t forget trying the insurer of the car that you have your No Claim Discount on as may qualify for some kind of second car discount.