No Claims Bonus is the biggest rating factor that affects your price. But what is it and how does it work?
How is No Claims Bonus calculated?
NCB is measured in years and you can earn one year of NCB for every full year that you have insurance and drive without making a claim on the same policy. So if you drive for three years without making a claim, you will have 3 years NCB.
Who gets the No Claims Bonus discount?
NCB is awarded to the main driver (who is usually the policyholder). Therefore, if you are an additional driver on a policy that has built up a number of No Claims Bonus years, you cannot use this on a new policy in your own name. You would have to start from zero NCB years.
However, some firms may allow named drivers to earn their own NCB that can be transferred to a new policy as long as it's with the same company. This can also apply to multicar insurance policies where only the person who's fault it was will have their NCB affected.
What is the maximum number of No Claims Bonus years?
Generally speaking, the maximum number of NCB years recognised by most insurance companies for discount purposes is 5 years although some recognise up to 9 years or more.
What discount can I get for No Claims Bonus?
You will be rewarded with a discount on your car insurance after just earning one year of NCB. The amount of discount varies between providers but for one year you could expect around a 25% discount. The maximum discount awarded for having full NCB (5 years+) could be up to a 75% discount.
What happens to my No Claims Bonus if I make a claim?
It depends on the insurer and the circumstances of the claim. If the claim is deemed not to be your fault i.e. a no fault claim, then your NCB may remain unaffected although there maybe circumstances where it will be.
Where the claim is your fault, the insurer generally knocks down your NCB by a couple of years but again this depends on the company.
For example, if you had 5 years NCB, you maybe be penalised by the insurer and have 2 years knocked off leaving you with 3 years NCB.
What does Protected No Claims Bonus mean?
For a fee, many firms offer an additional product that protects your NCB. This extra level of cover prevents your NCB from being knocked back in the event of a claim. Depending on the insurer, it will generally allow you around two claims in three years before your bonus is affected. Check with the company for their specific rules.
How do I prove my No Claims Bonus to a new insurance company?
If you change insurers, they will ask you to provide proof of your stated NCB years. This proof can simply be a copy of your current renewal notice from your existing company or some other written proof from the insurer showing the NCB you have earned. You can usually provide this proof by uploading it online to your new insurance company.