What is a no-claims bonus and how does it work?
Building up a no-claims bonus can reduce the cost of your car insurance, but what happens when you make a claim, change insurer or insure another car?
A no-claims bonus (NCB) – also known as a no-claims discount (NCD) – is a discount applied to your car insurance based on the number of claim-free years you’ve accumulated.
Generally, you’ll earn another year of NCB for each full policy year you complete without making a claim that affects it. The more years you accumulate, the greater the discount an insurer may offer.
It sounds simple enough, but there are plenty of complications. Different insurers have different rules for how much your NCB is worth, how many years they’ll recognise and what happens after a claim.
It’s also important to understand that your no-claims bonus and your claims history are not the same thing. Here’s what you need to know.
Is a no-claims bonus the same as a no-claims discount?
For practical purposes, yes. You’ll see both no-claims bonus (NCB) and no-claims discount (NCD) used by insurers, comparison websites and other organisations.
Both generally refer to the same thing: the discount applied to your premium according to the number of claim-free years you’ve built up.
How is a no-claims bonus calculated?
Your NCB is usually recorded as a number of years. Complete one full year of insurance without a claim that affects your NCB and you’ll generally earn one year. Complete another and you’ll have two years, and so on.
However, the discount those years earn you isn’t standardised across the insurance industry.
An insurer might recognise five years of NCB, for example, but that doesn’t mean you’ll automatically receive 50% off your premium. Insurers set their own discount scales and decide how much each number of claim-free years is worth.
They may also set a maximum number of years they’ll recognise for discount purposes. So two insurers can look at exactly the same driving and claims history and apply different NCB discounts.
Five years’ NCB doesn’t mean 50% off
Your no-claims bonus is normally measured in years, not as a universal percentage.
Each insurer decides how much discount those years are worth, so five years of NCB could produce a different saving with different insurance companies.
How much can a no-claims bonus save me?
There’s no single answer because insurers calculate their premiums and NCB discounts differently. Generally, accumulating more claim-free years should increase the discount available until you reach the insurer’s maximum.
But remember that NCB is only one part of your insurance calculation. Your age, address, occupation, vehicle, annual mileage, driving history and many other factors can affect the underlying premium. That means your renewal price can still rise even if you’ve gained another year of NCB.
For the same reason, an insurer offering a larger NCB percentage doesn’t necessarily provide the cheapest overall policy. Compare the final premium and cover provided, rather than choosing an insurer purely because it advertises a larger no-claims discount.
Will my no-claims bonus eventually max out?
Usually. Insurers can set a maximum number of NCB years that they recognise for discount purposes. That can create an odd situation where you’ve driven claim-free for considerably longer than the number shown on your policy.
If you’re changing insurer, check how many years the new company will recognise. A new insurer may have a lower maximum than your previous one.
It’s also worth retaining evidence of the full NCB you’ve accumulated, particularly if you’re moving to an insurer that only displays a lower maximum.
What happens to my no-claims bonus if I make a claim?
It depends on the type of claim, the circumstances and your insurer’s rules. An unprotected NCB doesn’t necessarily disappear completely after one claim. Many insurers operate a step-back system, reducing your NCB by a set number of years.
A fault claim will normally reduce an unprotected NCB. A common reduction is two years, but this isn’t a universal rule and your policy documents should explain how your insurer applies its step-back.
Multiple claims can result in a larger reduction. This is another reason to check the policy terms rather than assuming all insurers treat NCB in the same way.
What does a ‘fault claim’ actually mean?
A claim being recorded as a fault claim doesn’t necessarily mean the accident was actually your fault. For insurance purposes, a fault claim can also mean that your insurer paid out but wasn’t able to recover its costs from somebody else.
For example, your parked car might be hit while you’re nowhere near it. If the other driver disappears and can’t be identified, you clearly didn’t cause the accident – but if your insurer pays to repair your car and can’t recover that money, the claim may still be recorded as a fault claim. That can affect an unprotected NCB.
Does a non-fault accident affect my no-claims bonus?
Not necessarily, but it can do temporarily. If you claim through your own insurer following an accident that wasn’t your fault, your NCB may be affected while your insurer attempts to recover its costs from the responsible driver’s insurer.
Once those costs are recovered and the claim is treated as non-fault, your NCB should be restored accordingly. This is why insurance claims that appear straightforward can sometimes affect an NCB while liability or cost recovery is still being resolved.
It’s also worth remembering that a non-fault accident can still affect your future insurance premium. Your claims history and NCB are separate things, so retaining your NCB doesn’t guarantee that your insurance price will remain unchanged.
Does simply reporting an accident affect my no-claims bonus?
If you report an incident but don’t make a claim and your insurer doesn’t have to pay anything, it shouldn’t reduce your NCB.
The incident will normally be recorded as notification only. However, reporting an accident can still affect the price you’re quoted at renewal. Insurers take previous incidents into account when assessing risk, even where no claim was ultimately made.
Your policy will usually require you to report accidents and incidents regardless of whether you intend to claim, so don’t simply keep quiet about an accident to protect your insurance price. If another party subsequently makes a claim against you, the situation can also change.
What is protected no-claims bonus?
Many insurers allow you to pay extra to protect your no-claims bonus. The exact rules vary, but protection generally allows you to make a certain number of claims within a specified period without your accumulated NCB being reduced.
It can be useful if you’ve spent several years building up a substantial discount. But there’s a very important catch.
Protected NCB doesn’t protect your premium
Protecting your no-claims bonus generally protects the number of NCB years or the associated discount. It doesn’t guarantee that the underlying cost of your insurance won’t increase after a claim.
Your insurer can calculate a higher basic premium at renewal and then apply your protected NCB to that higher price.
So don’t assume that paying for NCB protection means an accident can’t make your insurance more expensive. Check the policy terms as well, as insurers can limit how many claims you can make before the protection is reduced or lost.
Should I protect my no-claims bonus?
It depends on how much protection costs, how many years of NCB you’ve accumulated and the insurer’s rules about what happens after a claim. When comparing quotes, look at the cost both with and without protection and check how many claims you’re permitted before the NCB is affected.
It’s also worth looking at the insurer’s NCB step-back rules. Knowing what you’d actually lose after an unprotected claim gives you a much better idea of whether paying to protect it represents worthwhile value.
Can I take my no-claims bonus to another insurer?
Usually, yes. Your NCB isn’t generally tied permanently to one insurance company, so you can normally provide evidence of your accumulated NCB when switching insurer.
However, the new insurer decides how much NCB it will recognise and what discount to apply. If you’ve accumulated nine years, for example, a new insurer may only use five years when calculating its maximum discount.
That doesn’t necessarily mean your longer claim-free history has ceased to exist, so keep your proof of NCB.
How do I prove my no-claims bonus?
When changing insurer, your new insurance company may ask for proof of your existing NCB. This may be included in your renewal or cancellation documents, or available through your previous insurer’s online account. If not, you can ask the insurer to provide confirmation.
Some insurers can verify your history electronically, but don’t assume this will always happen automatically. Check what evidence the new insurer requires and provide it within any specified deadline. If you claim more NCB than you can prove, the insurer could alter your premium or policy.
Does my no-claims bonus expire?
If you stop holding your own car insurance policy for a while, you shouldn’t assume that your existing NCB will remain valid indefinitely. Insurers set their own rules. Many will accept an NCB that was last used less than two years ago, while some will accept one that’s older.
This can matter if you’ve stopped driving temporarily, moved overseas, switched to a company car or spent several years as a named driver on somebody else’s policy. If you’re returning to car ownership after a gap, ask potential insurers whether they’ll recognise your previous NCB before buying the policy.
Can a named driver build a no-claims bonus?
Usually, the conventional NCB belongs to the policyholder rather than additional named drivers. That means spending several claim-free years as a named driver on somebody else’s policy doesn’t normally give you the same transferable NCB you’d have accumulated by holding your own policy.
Some insurers offer their own named-driver discounts or recognise claim-free experience when a named driver later takes out a policy of their own. However, this isn’t necessarily equivalent to a conventional NCB and another insurance company doesn’t have to recognise it. If you’re relying on named-driver history when buying your own insurance, check with the insurer first.
Can I use the same no-claims bonus on two cars?
Generally, no. A conventional NCB normally applies to one vehicle and one policy at a time. You can’t simply take five years of NCB and apply the same five years simultaneously to two completely separate insurance policies. This is particularly relevant if you’re buying a second car while keeping your existing vehicle.
Some insurers may offer an introductory or mirrored discount for the second vehicle, while multi-car policies can work differently. But that’s an insurer-specific discount rather than simply duplicating your existing NCB.
Make sure you tell the insurer exactly what you’re doing rather than entering the same NCB on two applications.
How does NCB work with multi-car insurance?
Multi-car policies can make things slightly more complicated. Each vehicle and driver may accumulate NCB differently depending on how the insurer structures the policy.
Don’t assume that combining two cars under one policy automatically combines their existing NCB into one larger bonus, or that every driver will begin accumulating their own transferable NCB.
Before moving to a multi-car policy, ask how each person’s existing NCB will be recorded and what proof you’ll receive if one of you later moves to another insurer.
Can I transfer a no-claims bonus earned overseas?
Possibly, but it depends on the insurer. Some UK insurers may recognise claim-free driving or NCB accumulated overseas, while others won’t.
If an insurer is prepared to accept it, you’ll usually need suitable evidence from your previous insurance company.
Requirements can vary, so check what documentation is acceptable before taking out the policy rather than assuming your overseas NCB will transfer automatically.
What if I’ve been driving a company car?
Again, this depends on the insurer. Driving a company car without making claims doesn’t necessarily mean you’ve accumulated a conventional personal NCB, because you may not have been the policyholder.
However, some insurers may take your claim-free company-car history into account when providing a quote. You may need a letter or other evidence from your employer, fleet operator or insurer confirming your driving and claims history.
The same principle can apply when moving from commercial vehicle insurance to a private car policy: don’t assume a commercial NCB will automatically be accepted.
Do windscreen or other small claims affect my NCB?
Some types of claim – commonly windscreen claims – may be treated differently and won’t necessarily reduce your NCB. But there’s no reason to assume that every relatively inexpensive claim is automatically exempt.
Check your policy terms or ask your insurer before making a claim if you’re concerned about how it will affect your NCB. Remember that whether a claim reduces your NCB and whether it affects your future premium are two different questions.
The key thing to remember about no-claims bonuses
A no-claims bonus is fairly simple in principle: accumulate claim-free years and an insurer may give you a larger discount.
Where it gets complicated is that there’s no single industry-wide formula.
Insurers can differ in how many NCB years they recognise, how much discount they apply, what happens after a claim, how protection works and whether they’ll accept an NCB earned elsewhere.
And your NCB isn’t the same as your claims history.
You can retain your NCB and still face a higher premium after an accident, while an accident that wasn’t your fault can temporarily affect your NCB if your insurer hasn’t yet recovered its costs.
When comparing car insurance, look at the final premium and cover rather than concentrating on the advertised NCB percentage. And whenever you’re changing insurer, make sure you understand exactly how your existing no-claims history will be recognised.
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This article was originally published in August 2022 and was most recently updated in September 2026.
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