What Is A No-Claims Bonus And How Does It Work?
A no-claims bonus (NCB) is a discount on your car insurance premium that builds for every consecutive year you drive without making a claim. After five claim-free years, most insurers offer a discount of 50–60%.
Your NCB is one of the biggest factors in what you pay for car insurance. It belongs to you, not the car, and you can transfer it when you switch insurers or change vehicles.
This guide covers how the discount builds, what happens after a claim, how protection works, and how to keep your NCB intact when life changes.
Your no-claims bonus can cut your premium by up to 60% after five claim-free years. Protecting it is cheap, but protection does not stop your overall premium rising after a claim.
Get a car insurance quote to see how much your no-claims bonus is saving you.
- How does a no-claims bonus work?
- What does no-claims bonus protection actually cover?
- What happens to your NCB after a claim?
- Can you transfer your NCB to a new insurer or car?
- Do named drivers earn their own NCB?
- Does your NCB expire if you stop driving?
- How does your NCB affect your car insurance quote?
- Frequently asked questions (FAQs)
How does a no-claims bonus work?
You earn one year of no-claims bonus for every full 12 months you hold a car insurance policy without making a claim. The longer you go without claiming, the larger the percentage discount on your premium.
How quickly does the discount build?
According to the Association of British Insurers, discounts can reach 30% after one claim-free year and 60% after five. Some insurers extend beyond five years, with a few recognising up to nine or even fifteen years of NCB.
| Years claim-free | Typical discount range |
| 1 year | 10–30% |
| 2 years | 20–40% |
| 3 years | 30–50% |
| 4 years | 40–55% |
| 5 years | 50–60% |
| 6–9+ years | 60–70% (insurer dependent) |
The exact percentage varies between insurers. One provider might offer 55% after five years while another offers 65%. This is one of the reasons comparing quotes matters.
Is there a maximum NCB?
Most insurers cap the discount at five years. Others extend it to seven, nine, or in rare cases fifteen years. Beyond the cap, additional claim-free years do not increase the discount further, but they do help your overall claims history look stronger to underwriters.
What does no-claims bonus protection actually cover?
No-claims bonus protection is an add-on that keeps your NCB discount intact after a claim. It does not prevent your overall premium from rising. This is the most misunderstood part of NCD.
What protection does and doesn’t do
With NCD protection, you can usually make one or two claims within a set period (typically two claims in three years) without losing your accumulated years of discount. Your NCB stays at its current level.
What protection does not do is freeze your premium. After a claim, your insurer recalculates your risk. A fault claim goes on the Claims and Underwriting Exchange (CUE) database, and every insurer you quote with in the next five years can see it. Your base premium will almost certainly increase. The NCB discount still applies, but it is applied to a higher starting price.
How much does NCD protection cost?
NCD protection typically adds £20–£60 to your annual premium. The cost depends on the insurer, the number of NCB years you have, and your overall risk profile. Most insurers require at least two or three claim-free years before you can add protection.
Whether it is worth paying depends on how much your NCB saves you. If you have five years of NCB on a £600 policy, your discount is roughly £300–£360. Paying £30 to protect that discount is a reasonable trade-off. On a first car insurance policy with only one year of NCB, the numbers are less compelling.
What happens to your NCB after a claim?
If you make a fault claim without NCD protection, your insurer reduces your NCB using a step-back scale. One claim typically knocks two years off your accumulated bonus.
The step-back scale
Every insurer uses a slightly different scale, but the pattern is consistent. A single fault claim reduces your NCB by roughly two years. A second claim in the same period can reset it to zero.
| NCB before claim | After 1 fault claim | After 2 fault claims |
| 5 years | 3 years | 0 years |
| 4 years | 2 years | 0 years |
| 3 years | 1 year | 0 years |
| 2 years | 0 years | 0 years |
| 1 year | 0 years | 0 years |
After a claim, it takes another full policy year without a claim to start rebuilding. If your claim takes a long time to settle, ask your insurer how this affects your NCB renewal date.
Which claims leave your NCB intact?
Not every claim costs you NCB years. Non-fault claims, where your insurer recovers the full cost from the other party, usually leave your bonus untouched. Windscreen and glass claims are also excluded by most insurers.
You must still report accidents to your insurer even if you do not intend to claim. Failing to report can give them grounds to void your policy later.
Related: How long does an accident stay on your insurance?
Can you transfer your NCB to a new insurer or car?
Yes. Your no-claims bonus belongs to you, not the vehicle. When you switch insurers or change cars, your NCB transfers with you as long as you can prove it.
Switching insurers
Your new insurer will ask for proof of your NCB, usually a renewal letter or cancellation confirmation from your previous provider. Most insurers accept proof dated within the last two years.
You can only apply your NCB to one policy at a time. If you insure a second car, you need to build a separate NCB for that vehicle. Some multi-car policies offer a small introductory discount on the second vehicle to offset this.
Getting proof of your NCB
Most insurers send NCB proof automatically when you renew or cancel. If you do not receive it, call your previous insurer and request a confirmation letter. Keep a copy, as you may need it again if you switch providers in the future.
Related: Can I transfer my no-claims bonus to another car?
Do named drivers earn their own NCB?
In most cases, no. Named drivers on someone else’s policy do not build their own no-claims bonus. The NCB belongs to the main policyholder.
How named driver claims affect the policyholder
If a named driver causes an accident and a claim is made, it counts against the policyholder’s NCB. The policyholder’s bonus is stepped back as if they had made the claim themselves.
A small number of insurers allow named drivers to accumulate driving experience that can be used when they take out their own policy. This is not the same as a formal NCB and may not be accepted by all providers. For young drivers building up to their own policy, it is worth checking whether the insurer recognises named driver history.
Does your NCB expire if you stop driving?
Yes. Most insurers accept NCB proof for up to two years after your last policy ended. After that, your accumulated bonus may no longer be valid.
Company cars and overseas driving
If you have been driving a company car, you will not have built up a personal NCB during that time. Some insurers accept a letter from your employer confirming your claims-free driving record, but this is at the insurer’s discretion.
Returning from overseas, some UK insurers accept NCB earned in EU/EEA countries and a limited number of other nations. You will need proof in English from your foreign insurer, and the NCB must usually be less than two years old.
If your NCB has lapsed, a black box policy can help you rebuild quickly. Telematics insurers reward safe driving with lower premiums in the short term while you build a new NCB.
How does your NCB affect your car insurance quote?
Your NCB is applied as a percentage discount after your insurer calculates the base premium. The base price is set by factors including your age, address, vehicle, claims history, and the type of cover you choose.
NCB alongside other rating factors
A strong NCB reduces the final price, but it cannot override a high base premium. A 21-year-old with five years of NCB will still pay more than a 45-year-old with five years of NCB, because age and insurance group weigh heavily in the calculation.
The FCA’s general insurance pricing rules mean insurers cannot charge existing customers more than new customers for the same policy. Your NCB still applies on top of the regulated base price.
Choosing the right cover level matters too. A fully comprehensive policy is often cheaper than third-party, fire and theft because comprehensive attracts lower-risk drivers, and the NCB discount is applied to a lower base price.
Understanding how your car insurance is calculated helps you see where NCB fits alongside excess, voluntary cover options, and other controllable factors.
Frequently Asked Questions (FAQs)
Some insurers accept NCB earned on a motorbike policy, but it is not universal. Check with your car insurer before assuming the discount will carry over. You will need proof from your bike insurer.
Request a confirmation letter from your current or most recent insurer. Most send it automatically at renewal or cancellation. If you need it urgently, call them directly.
It depends on how many years of NCB you have and what your premium is. If your discount saves you several hundred pounds a year, paying £20–£60 to protect it is reasonable. For a policy with only one year of NCB, the cost is harder to justify.
No. Most insurers exclude windscreen and glass claims from the NCB step-back scale. Check your policy wording to confirm, as some smaller insurers may treat it differently.
The Claims and Underwriting Exchange (CUE) is a central database that records motor insurance claims. Insurers check it when you apply for cover. Claims stay on CUE for six years, regardless of fault.
No. Your NCB applies to one policy at a time. If you insure a second car, you start with zero NCB on that vehicle unless the insurer offers a multi-car introductory discount.
Most insurers accept NCB proof for up to two years after your last policy expired. After that, you may need to start building from scratch. Some insurers have shorter retention periods of 12 months.
Usually not, as long as your insurer recovers the full cost from the other driver’s insurer. If they cannot recover the money, it may be treated as a fault claim and reduce your bonus.
Most insurers require at least two or three claim-free years before you can add NCD protection. You cannot protect an NCB you have not yet built.
No. Fines and penalty points are separate from your claims record. They do not reduce your NCB, but they can increase your base premium at renewal because they affect your risk profile.