Is 9 years the maximum no-claims bonus?
02/04/2024
How many years can you build up your no-claims bonus? Is it worth protecting your no-claims bonus? Some of the answers may surprise you. In this article we’ve broken down the maximum number of years that UK insurers will typically allow for building up your no-claims bonus. We’ve also explored some of the common misconceptions and queries around what you can and can’t do with a no-claims bonus.
How does a no-claims bonus work?
A no-claims bonus (NCB) rewards you for each 12-month period you go without being involved in a claim. Each year added to your no-claims bonus (NCB) can bring significant discounts to your total annual car insurance premium. The size of the discount will vary across insurers and not all will advertise the size of their no-claims discounts. Virtually all providers however will offer some sort of premium reduction with each year a claim is not made.
So is it true that 9 years is the limit for building up a no-claims discount? – Unfortunately the answer is largely yes, most UK insurers will not offer further discounts after 9 years of no claims, but not all of them.
Why is 9 years the maximum no-claims bonus?
While the majority of UK Insurance providers will cap their no-claims bonus at 9 years, this isn’t always the case. Some insurers will allow you to even build up a no-claims bonus for a maximum of 20 years. A no-claims bonus can help cut down your car insurance premiums by hundreds of pounds. Many NCDs will offer you discounts of up to 30% for your first year of no claims alone. This can be built up to 60% or even 70% with some insurers, bringing even greater price reductions to your premiums. The reason for insurers imposing limits on the number of years that a no-claims bonus can be built up is simple. If a discount is continually added to your premiums each year indefinitely, you could theoretically get your car insurance down to an unsustainably low price for the insurer.
Despite some 5-year no-claims bonuses offering reductions of up to 60% with certain providers, there are some 20-year no-claims bonuses that will surprisingly only offer a 70% premium reduction. This is because with each additional year added to your no-claims bonus, the size of each additional discount will typically decrease. It was found that from the 3rd year onward for most no-claims bonuses, the additional discount to premiums was only a few percentage points. This is in comparison with the typical jump from 0 to 1 year of no claims, which typically saw price reductions of around 30%.
How much is a 1 year no claims discount?
The size of a no-claims discount after your first year without a claim can vary between insurers. Some insurers will offer discounts of over 30% after 1 year of no claims. Some insurers may start on a smaller discount that grows larger over a period of typically 5 years, with the largest discounts being given later on.
How many claims does each motorist make on average each year?
Personal finance experts at Quotezone.co.uk sampled 100,000 car insurance policies from January 2023-2024 across UK regions and discovered drivers are making less than one claim per year on average.
| REGION | AVG CLAIMS MALE | AVG CLAIMS FEMALE |
| West Midlands | 0.17 | 0.19 |
| London | 0.17 | 0.18 |
| South East England | 0.16 | 0.18 |
| East of England | 0.16 | 0.18 |
| Yorkshire | 0.16 | 0.18 |
| East Midlands | 0.15 | 0.17 |
| South West England | 0.15 | 0.16 |
| North West England | 0.15 | 0.16 |
| Scotland | 0.14 | 0.16 |
| North East England | 0.13 | 0.15 |
| Wales | 0.12 | 0.14 |
Our data found that the average number of claims made per motorist was higher amongst females, although the proportion of claims was still very low.
Whilst Yorkshire, East of England, South East England, London and West Midlands were all more likely to see a higher number of claims, all averages remained below one claim per year across the country.
How to check your no-claim bonus
The easiest way of seeing how many years you have on your no-claims bonus is to check your insurance renewal documents. These can give you details on your policy as well as any no-claims discount. You can commonly find these in the following.
- Your renewal letters
- Online insurance account
- Contact your provider directly
As previously mentioned, not all insurers will cap their no-claims bonus at 9 years, so checking with your insurer where you stand in terms of your no-claims discount is always the best option.
Is a no-claims bonus the same as a no-claims discount?
Yes, a no-claims bonus and a no-claims discount (NCD) are the same thing. Both are simply referring to a reduction in car insurance premiums for each year you go without making a claim. Virtually all insurers in the UK will offer a no-claims bonus scheme for their customers in order to entice new customers and remain competitive against other insurers.
Can I insure two cars with the same no-claims discount?
You cannot technically insure two cars under the same no-claims discount, however there are some other ways you can use a no-claims bonus on different vehicles and policies. For more information refer to the following guide, Can I insure two cars with the same no-claims discount?
Is it worth protecting a no-claims bonus?
This really depends…some experts have stated that protecting your no-claims bonus is useful in the early years of building up your no-claims discount. This is because the size of a no-claims discount in the initial years is often sizable and can outweigh the additional costs paid to protect your NCB, especially for younger drivers. After around 5 years of building up a no-claims discount, typically the additional discount offered each further year with no claims is significantly reduced. After a certain point, it is likely that the additional discount offered through a no-claims bonus will be outweighed by the cost of protecting your discount against claims. Some insurers may adjust the premium of your car insurance anyway to reflect any accidents you are involved in, even if your no-claims discount is protected. This is because you are only protecting the percentage decrease when protecting your NCD, not the total premium cost.
It is important to note however that some insurers may offer smaller discounts the first year you go without making a claim, this can then gradually increase rather than having a large initial discount with smaller discounts added each additional year. This would then mean it is likely worth only protecting your no-claims discount after having built up a sizable reduction. The way in which no-claims discounts are structured will largely be down to the insurer, so this will be an important thing to consider when deciding if you want to protect your no-claims bonus.
Should I protect my no-claims bonus?
The best way to think of no-claims bonus protection is that you are essentially getting insurance for your insurance. Some drivers, particularly young drivers with little years behind the wheel can benefit massively from the reductions offered by a no-claims discount. This would mean that the cost of protecting your no-claims bonus, most providers charge between 10% and 30% extra on your premium, could actually be worth it when compared with the savings of your no-claims discount. In short…whether you decide to protect your no-claims bonus is largely down to whether it is worth the cost of protecting it.
Remember! – Having no-claims bonus protection does not mean that your premiums can’t increase after an accident.
How much does it cost to protect your no-claims bonus?
Whilst the exact cost of protecting your no-claims bonus will vary across insurers, the typical cost is between 10% and 30% extra on your premium amount. This means that for the average car insurance premium cost of £956, the cost of protecting your car insurance will typically fall anywhere between £95.60 and £286.80.
Can I use my no-claims bonus for other motor vehicles?
Typically you won’t be able to transfer your no-claims discount between different vehicle types, such as from car to motorbike or car to van. This is simply because your no-claims history whilst driving a car won’t necessarily demonstrate to insurers that you are at low risk of making a claim if you start driving another vehicle type.
With this said however it is still worth checking with individual insurers as some may permit a no-claims bonus to be honoured if you insure another vehicle type.
Can I keep my no-claims bonus if I switch insurance providers?
Generally there will be no issues with moving your no-claims bonus over to a new insurer. Some insurers will not recognise the exact discount offered by your previous insurer. For example, if your no-claims bonus has accrued 15 years without a claim but your new provider has capped their NCD at 9 years, your discount percentage may be impacted. Even if your existing no-claims bonus is within the cap of your new provider, you may not get a like for like discount. This is due to some insurers offering greater discounts for going a certain number of years without making a claim.
Can insurers refuse to give me a no-claims discount?
Yes, insurers are not obligated to give a no-claims discount to their customers -although it is generally not a good idea as this will make them less competitive compared with insurers that do. Whilst insurers are within their rights not to offer you a no-claims discount, they will typically have some form of no-claims discount structure in place.
When changing insurers, it is important to remember that not all insurers have equal no-claims discount schemes. Your current discount percentage may well change to whatever your new insurer has set for the number of years accrued on your NCD. This means a 5-year no-claims bonus earning you a 60% discount with your current insurer may only get you a 50% discount with your new insurer. This change may still be worth it if the new insurer’s premiums are significantly lower than the current provider with a more generous NCD.
Can I keep my no-claims discount if I don’t drive anymore?
This depends on when you last drove. If it has been under two years then most insurers will honor your no-claims discount. You will still need to provide evidence of your no-claims discount when you do start driving again and take out a new insurance policy.
What are some of the restrictions of a no-claims discount?
- No claims discounts do not stop your total premium costs from rising – they simply give you a discount on the total amount.
- Insurers typically do not accept a NCB transfer from another driver such as from a parent to young driver.
- Even fault-free accidents can impact your no-claims bonus – you should check with your insurer for details
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This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes