A No Claims Discount (NCD), also known as a No Claims Bonus, is a reduction in premium as a reward for not making any claims on your insurance policy. The longer you go without having to make a claim, the bigger the discount year on year.

It’s a nice little bit of jargon you hear whenever you look into purchasing a car insurance policy, but what does a No Claims Discount (NCD) or a No Claims Bonus (NCB), actually mean?

In this article we'll aim to explain all things No Claims Discount - how it works, how you can protect it, and what happens to it when you take out short-term insurance cover.

Each year you go without making a claim, is another year added to your NCD. The exact discount you would be entitled to varies from insurer to insurer, but these can range in discounts from 30% - 70% off your annual premium.

It is not a legal requirement for insurance companies to provide a no claims discount, but most in the UK will do. In fact, how different insurers run their No Claims schemes can vary quite a bit, so it’s important to make sure you’re shopping around for the best deal for you. 

It's a good question!

The great thing is, as long as you stay insured and don't make a claim, your no claims discount should remain in place! You should be able to keep the same number of no claims discount years if you switch providers, but keep in mind that the actual discount applied may differ between insurers.

As long as you’re staying insured your no claims discount should be fine, but if you go without insurance for a long period, say for more than two years, you may have to start over or accept a reduced NCD when you take out a new policy. Again though, this is up to the discretion of the insurers.

In the unfortunate event that you do need to make a claim and you are at fault, or where the insurer cannot recover costs from another party, your No Claims Discount may be reduced or lost.

For example: One claim could reduce your No Claims Discount by two years, or multiple claims in a short period may result in the No Claims Discount being reset to zero.

However, in the event the claim is due to an accident where the other driver is at fault and their insurer pays for the damages, your No Claims Discount could remain unaffected, but again, this varies between insurance providers.

Many insurers now offer optional 'No Claims Discount Protection’. This allows drivers to make a predetermined number of claims without losing their discount. This option of protection typically comes at an additional cost to your premium and does have limitations on the number of claims allowed before the discount is reduced or removed.

Nope - one of the most helpful things about a temporary car insurance policy is that it does not affect your existing No Claims Discount.

If you are borrowing someone else's car and end up needing to make a claim, it will also protect their No Claims Discount as well.