Your no claims discount is one of the most valuable things you build as a driver, quietly cutting your premium year after year. Yet many people are unsure how it works, what happens when they claim, and whether paying to protect it is worth it. This guide explains the no claims discount in plain English.
What a no claims discount is
A no claims discount, sometimes called a no claims bonus, is a reduction in your premium that you earn for each year you go without making a claim. The longer you go without claiming, the bigger the discount, up to a maximum set by each insurer. It is essentially a reward for being a lower-risk customer, and over several years it can take a large chunk off your price.
How it builds up
You usually earn one year of no claims discount for each full year of cover without a claim. Many insurers cap the discount once you reach a certain number of years, often around five to nine, after which extra years do not increase it further but still help you qualify for the top rate. The exact discount for each year varies between insurers, which is one more reason to compare quotes rather than assume.
What happens when you claim
If you make an at-fault claim, you usually lose some of your no claims discount at renewal, which pushes your premium up. How much you lose depends on the insurer's rules, but a single claim can set you back a couple of years or more. This is why it is worth thinking carefully before claiming for minor damage, as covered in our guide to making a car insurance claim.
Non-fault claims and your discount
Not every claim affects your discount. If you have an accident that was entirely someone else's fault and your insurer recovers its costs from the other party's insurer, your no claims discount is usually protected. The problem arises when the other driver is uninsured or untraced and the costs cannot be recovered, which can still affect you, as explained in our guide to being hit by an uninsured driver.
Protecting your no claims discount
For an extra cost, many insurers let you protect your no claims discount, so that a set number of claims within a period will not reduce it. This can be worth having once your discount is large, because losing several years of discount can be expensive. Note that protection stops the discount being cut, but it does not freeze your overall premium, which can still rise for other reasons.
Protected discount is not a frozen price
This is a common misunderstanding worth spelling out. Protecting your no claims discount keeps the discount itself intact after a claim, but the base price the discount is applied to can still go up, for example if the wider cost of claims rises, as discussed in our guide to why car insurance is so expensive. So even with a protected discount, you should still shop around at renewal.
Proving your no claims discount
When you switch insurer, the new one will usually ask for proof of your no claims discount. Your previous insurer can provide this, often automatically or on request. Keep your renewal documents, as they show your earned years. If there is a gap in your cover, some insurers may not accept older no claims discount, so it is worth checking how long a break they will allow before the discount lapses.
Can you use it on more than one car?
Generally, a no claims discount is earned and used on one policy at a time, so you cannot usually apply the same discount to two cars at once. If you insure a second car, you typically start building a separate discount on it, though some insurers offer multi-car arrangements. If you stop driving for a while, ask how long your discount can be preserved before it expires.
How many years can you build?
Most insurers cap the no claims discount once you reach a certain number of claim-free years, commonly somewhere between five and nine, though some go higher. After the cap, extra years do not increase the percentage discount, but they still help you qualify for the best rates and show a long clean record. The exact cap and the discount at each year differ between insurers, which is yet another reason to compare rather than assume yours is the best available.
Named driver experience
Some insurers recognise experience built up as a named driver on someone else's policy, which can help a newer policyholder get a better starting position. This is not the same as a full no claims discount in your own name, and not every insurer accepts it, but it is worth asking about if you have driven for years as a named driver before taking out your own policy. Keep any evidence your previous insurer can provide.
If you have a break from driving
If you stop driving for a while, perhaps because you sell your car or move abroad, your no claims discount can usually be preserved for a period, often around two years, before it lapses. The exact limit varies, so if you expect a gap, ask your insurer how long they will honour your discount. Letting it lapse means starting again from scratch, which can be costly, so it is worth planning around.
Taking your discount to a new insurer
Your no claims discount belongs to you, not to a particular insurer, so you can take it with you when you switch, which is one of the rewards of shopping around. The new insurer will ask for proof, which your old one can supply. One thing to watch is company cars: if you drive a company car insured by your employer, you may not build a personal no claims discount during that time, so check your position before assuming your discount has kept growing. Where that is the case, some insurers will consider your overall experience instead, so it is worth asking.
Treat your no claims discount as a genuine asset worth protecting. Each clean year adds to it, a single avoidable claim can set it back, and keeping proof and avoiding gaps in cover ensures you carry its full value with you from one insurer to the next.
In short
A no claims discount rewards each claim-free year with a bigger reduction in your premium, up to an insurer's cap. An at-fault claim usually cuts it and raises your price, while a non-fault claim where costs are recovered usually does not. Protecting it stops the discount being cut but does not freeze the overall price. Keep proof, and mind any gaps in cover.
Where to get help and next steps
To protect the value of your discount, read how to make a car insurance claim so you know when claiming is worth it, and how to lower your car insurance for the wider set of savings.