If you decide to change insurance provider, you’ll want to get the best deal and that means being able to prove your no claims bonus (otherwise known as a no claims discount or NCD). So, how do no claims discounts work and how can you go about proving yours to a new insurance provider? Here’s our guide to all things NCD.
How does a no claims bonus work?
A no claims bonus is a reward – in the form of a discount on your insurance premium – that you can receive for not making any claims against your policy where you were at fault. In other words, it’s a great way for safe drivers to save money on the cost of their car insurance.
Before giving you a quote, an insurer will determine your risk profile by taking into account many factors such as your age, how long you’ve been driving, what kind of car you have, etc. The more years of no claims bonus you accrue, the less risk you pose to the insurance provider. If you find yourself in an accident where you’re not at fault and another party takes the blame, this won’t affect your no claims bonus.
You may also have heard the term ‘no claims bonus’. The bonus refers to the reward scheme in general and the years you have accrued, whereas the discount is the actual reduction applied to your premium (but you’ll find that the terms are often used synonymously.) Your bonus can be carried to a new insurer, but bear in mind that the discount offered will differ between providers.
Some insurance policies that do not allow NCD to be accrued will offer an equivalent discount. For example, Adrian Flux offers a discount equivalent to a no claims bonus on its classic car policies.
How much money can I save?
The discount offered will differ depending on your insurance company and the number of claim-free years you’ve accumulated. According to The Association of British Insurers (ABI), a NCD can be as much as 30% off your premium after one year, and 60% after five consecutive no-claim years.
Most insurers only take five years of no-claims into account when working out your discount. After this point, you’ll still save money, but the discount will remain much the same each year.
How long will my no claims history last?
Any no claims bonus you accrue will usually be wiped after two years of you not driving, although some schemes will accept your NCD after three years or more. It depends on the insurer. If you’re a named driver on someone else’s policy, you may be able to keep a no claims bonus, but it depends on the insurance provider and the terms of the policy.
If you aren’t accruing an NCD, this isn’t to say you can’t be rewarded for the driving experience you have built up while covered on someone else’s policy – if this is your situation, it’s best to speak to an insurance adviser directly who can explain your options.
Your no claims history will be wiped or reduced in the event of an accident where you are at fault. In most cases, your NCD will be reduced by two years. So, if you have three years’ NCD accrued, this will be reduced to one year. Once you reach six or more years’ NCD, your history will be reduced to three years. However, there is a way to protect your precious no claims bonus – it’s simply called no claims discount protection.
What is no claims discount protection?
No claims discount protection is a feature that can be added to your insurance policy, usually for an additional cost. It allows you to keep your bonus even if you make a claim where you are at fault.
If you have managed to build up multiple years of no claims, then you should consider getting NCD protection. That way, if the worst happens, and you make a mistake driving, you won’t need to start your bonus again from 0 years. It is worth noting that this protection doesn’t necessarily prevent your premium from going up, but you’ll still be in a better position with your NCD intact.
How to prove your no claims discount
Firstly, you’ll need to make sure you have access to certain documents from your previous insurer.
What is an accepted form of proof of no claims?
There are three main forms of proof:
- The renewal invite from your current or previous insurer will state the number of years you’ve enjoyed a no claims bonus.
- A cancellation letter from your previous insurer, as long as it states your no claim bonus.
- A letter from your previous insurer confirming your no claims bonus. You can request this by getting in touch with them.
The above documents should be dated within two years of your new policy’s start date. There is often a strict time frame in which you must get these to your new insurer once you take out a policy with them. This ranges from as little as seven days to 28 days from the start date.
Many insurance sites will give you the option to directly upload these documents online, or you can email or post them. In certain cases, your new insurer may require direct contact with your previous insurer to confirm your no claims discount. If you’re not sure, contact your insurer for guidance.
Avoid losing your no claims discount
- If you fail to provide proof of no claims within the time limit stated by your insurer, it may invalidate your discount. In some cases, it will mean your policy is cancelled – leaving you uninsured.
- Some insurers require the original document of proof and will not accept a photocopy version of your no claims discount letter. It is still wise to take a photocopy of this for your own records.
- Make sure you get a receipt confirming that your insurance provider has the information they requested. If this isn’t sent automatically, or you aren’t sure, follow up with a call.
With a specialist car insurance broker like Adrian Flux, we can walk you through this process in greater depth. You can also ask for policy features that match your needs and we will do our very best to find a company with a policy that offers exactly what you need. Get in touch with one of our experts.
Equally, if you think your no claims discount entitlement might have expired, it’s likely we can still help you with our Expired NCB Insurance.