We all want the cheapest car insurance we can get, but what’s the best way to get a discount? Besides paying up front, boosting your excess, or driving less – your no claims bonus is probably the easiest way to lower your costs. So, what is it exactly? How do you get it? And, how does it affect your insurance price?
What is a no claims bonus?
You get a no claims bonus, also called a no claims discount, at the end of your yearly insurance policy as a reward for renewing. The more years you go without claiming, the more no claims discount you have, pretty simple.
The value of each year’s NCB varies between insurance providers, but according to The Association of British Insurers, even one year’s NCB could lower your insurance by 30%.
How does no claims bonus work?
You can save a lot on your insurance once you’ve got five or more years no claims bonus - around 60 to 80% in fact. This is the maximum no claims discount, but how much discount you can get varies between providers.
A NCB is only awarded if you don’t claim that year. Even if you have an accident that wasn’t your fault, you’re hit by an uninsured driver, or your car gets stolen – you could lose your NCB, and your costs could even go up at your renewal.
There’s also a no claims bonus expiry which means if you don’t use it – you lose it. This only happens if you stop driving for more than two years, but it does mean after that, you’ll have to start again.
How to get a NCB?
To reward you for careful driving, insurers will give you a discount for every year you don’t claim. Of course, if you’ve never driven – you’ve not got any no claims, so insurers will see you as more of a risk, which means more expensive insurance.
To get that NCB a bit quicker and ultimately, get cheaper insurance, some providers offer 10 month policies. These are sometimes called a ‘Bonus Accelerator’, but aren’t accepted by all insurers so it’s worth checking before trying to speed things up.
What about named drivers?
Usually you can’t get a no claims bonus as a named driver because it’s on the main driver’s experience that the no claims discount is based. Some insurers do allow named drivers to build up a NCB with them, but you may find that it’s only available if you stay with that insurer, as there are only a selection of insurance companies that accept named driver no claims bonuses.
Multi car policies
Multi car policies can be quite tricky, but your no claims bonus should still apply to a multi-car policy. With most policies of this kind, only a driver who needs to claim will have their NCB affected. You can’t use your no claims on two cars, but it still helps to reduce the overall cost of your multi car insurance.
What happens if I claim?
When you make a claim on your policy you’ll usually lose some, or all of your no claims bonus if your insurer has to pay out – even if it’s not your fault. How much of it you actually lose depends on how many years NCB you have, as well as the insurer.
After an accident, there might be some situations where your NCB isn’t affected. Let’s say you were hit by another driver and they agree it was their fault – your insurance provider may recover all the costs from the other driver’s insurance, saving your NCB.
Can I protect my NCB?
Many insurers offer no claims protection for a small fee. This means that if you make a claim for something like damage caused by a storm, if your car is stolen, or hit by an uninsured driver then you won’t lose your no claims bonus. Some insurance providers also cover ‘fault’ claims – so your NCB is still protected even if your insurer can’t recover the costs of an accident.
Even if you’ve protected your no claims bonus, it’s worth remembering it isn’t a guarantee that the price of the policy won’t go up later on. Your premium is actually decided by your claims history, and your NCB is taken off the final price.
Can I transfer my NCB?
Transferring your no claims bonus between insurers is usually simple, but if you switch before the 12 month policy is over then you won’t earn your NCB for that year. This is because you’re given your proof of no claim bonus at the end of your policy (renewal period).
If you’re not sent your proof of no claims automatically with a renewal letter, you can give your insurance provider a call and ask them to send it to you. This is sometimes called a no claims bonus certificate and it’s what you’ll need to show to other insurers if you want to switch.
While your no claims bonus is the best way to lower your insurance costs, it doesn’t always mean your insurer will give you the best discount at renewal. It’s a good idea to get your no claims bonus letter when your policy’s finished, and shop around to get the most out of your discount. Visit the AA directly for more information on car insurance and to see the different levels of cover we provide.