The worth of your no claims bonus and the necessity of safeguarding your no claims discount: a closer look.
Car insurance premiums are a significant expense for many drivers, and one way to reduce these costs is by maintaining a no claims bonus (NCB). This article explores the factors that influence the value of an NCB and how you can make the most of it.
The primary factor affecting the value of an NCB is the number of consecutive years you have not made a claim. Each year without a claim generally increases your discount, often reaching a maximum after about five years [1][5]. However, it's essential to note that the actual monetary value of the NCB varies by insurer due to their specific discount structures [5].
The type of claims made also plays a crucial role. Claims where you are not at fault or related to weather typically do not reduce your NCB, whereas at-fault claims usually reduce your bonus by multiple years unless you have NCB protection [1]. Some insurers offer protected no claims discount policies, allowing customers to make a certain number of claims over a specified period of time without affecting their NCB [3].
Whether you switch insurers can impact the value of your NCB. Some insurers recognize your existing NCB when you transfer your policy, affecting the discount you receive [1][2]. On the other hand, if insurance is terminated for a longer period, most insurers will scrap the policyholder's NCB altogether [4].
Choosing a higher voluntary deductible can also reduce the premium and influence the effective value of your NCB since it lowers the likelihood of making small claims that affect the bonus [2]. However, this could lead to higher out-of-pocket expenses in the event of an accident.
It's worth noting that some insurers do not cancel an NCB if the policyholder is not at fault in an accident or makes a minor claim [1]. However, it's always crucial to inform your insurer of any incidents, even if not claiming, to avoid invalidating the policy and having rejected claims later on [6].
In summary, the value of your no claims bonus depends on your claim history, optional protections purchased, insurer policies, deductible selection, and whether you maintain continuity with the same insurer or switch providers. This combination determines how much discount you receive on your premium and how much potential cost you save over time [1][3][5].
As of the third quarter of 2024, the average cost of car insurance peaked at £861 a year, but in the second quarter of 2025, it decreased to £757 a year [4]. Despite this decrease, car insurance prices are still above pre-pandemic levels.
In conclusion, understanding the factors that influence the value of your NCB can help you make informed decisions about your car insurance and potentially save you money in the long run. Always remember to read your policy carefully, ask questions, and shop around for the best deal.
[1] Money Saving Expert (2022). How to get a cheaper car insurance quote. Available at: https://www.moneysavingexpert.com/insurance/cheap-car-insurance/
[2] Compare the Market (2022). How to reduce your car insurance premium. Available at: https://www.comparethemarket.com/car-insurance/how-to-reduce-your-car-insurance-premium/
[3] Confused.com (2022). What is a no claims discount? Available at: https://www.confused.com/car-insurance/no-claims-discount
[4] BBC News (2025). Car insurance premiums fall for first time since 2011. Available at: https://www.bbc.co.uk/news/business-56936766
[5] GoCompare (2022). How to get the best car insurance deal. Available at: https://www.gocompare.com/car-insurance/how-to-get-the-best-car-insurance-deal/
Personal-finance tip: Maintaining a good no claims bonus (NCB) could potentially lower your car insurance premiums significantly. The number of consecutive years without a claim, the type of claims made, the insurer you choose, and the deductible amount can all impact the value of your NCB, hence affecting your premium. Be mindful of maintaining continuity with the same insurer or switching providers if better deals are available.
