What is no claims bonus and how is it built?

No Claims Bonus (NCB) (also known as No Claims Discount (NCD)) are awarded on most car insurance policies for each full year completed without you or a third party making any claim against your own insurance policy (known as a “fault” claim). By having this NCB discount to use on your car insurance policy, you can make huge savings. NCB can however only be applied to a single policy, cannot be combined with other NCB nor split to make multiple.

If NCB can only be applied to one policy, what happens when you want to insure a second vehicle?

If you have one set of NCB on your main policy and buy a second or third car, you cannot use the No Claims Bonus directly if it’s already on your first vehicle. This effectively starts the new policy with 0 (zero) years no claims bonus. We don’t think it’s fair to be paying for a policy on 0 bonus when you’ve earned 15 years NCB on your main car! So we (and many other brokers and insurers) can ‘mirror’ your no claims to provide a discount on the 0 bonus policy as if you had bonus to apply. We’ll still need proof that you have it, but the bonus can stay with your main vehicle. The main difference with mirroring is that it can only be done on claims-free years represented by bonus. If you have 3 years NCB but never made a claim, we can mirror 3 years. If you have 9 years bonus, but had an accident 3 years ago, we can only mirror 2 or 3 irrespective of your NCB. But even that should provide a something of a discount. Very recent claims could result in their being nothing to mirror.

NCB Shelf Life

Once No Claims Bonus comes off a policy either by cancellation, or the end of the policy’s life, any accrued No Claims Bonus has a 2 year shelf life. This is from most insurers. Once 2 years elapses from the date of cancellation or end of the last policy it was applied to, it disappears for good. This is something to pay particular attention to if you’re considering getting a company car, or consider sharing one car within the family. If you’re just a named driver on your partner’s policy or on a company car for two years, you could come out the other end looking to get insurance again and finding you have no bonus to use.

Stepping Back your No Claims Bonus

You accrue bonus when no claim is made against your policy. When an incident occurs, your no claims bonus will be affected in some way. Initially all claims will start as “pending” and assumed “fault” meaning all parties involved are deemed at fault until it has been investigated. If your insurer makes a full recovery or your legal team claim from the 3rd party directly, this is closed off and your own no claims bonus reinstated. If the claim goes against you, your no claims bonus is compromised and will be stepped back within certain rules. These vary by insurer, but three of the main insurers we work with are detailed in the table below.

No claims bonus protection

Once you’ve reached the threshold number of no claims bonus years (normally 4 or 5) you can opt to ‘protect’ your bonus. This means that when a fault claim would normally start stepping back your bonus straight away, it can be prevented for up to two claims. NCB protection does normally cost a small extra on top of your premium, but it can bring peace of mind. With bonus protection, your premium could still increase in the event of a claim, however your NCB discount would still apply in full.

The table below is for a driver with 5 or more years no claims discount and no current fault claims: (non fault claims where your insurer has made a full recovery do not count towards this step back procedure, however can still have an impact on your premium.

Highway

Markerstudy

Ageas

ERS

Without No Claims Bonus Protection

     1 Claim in any 5 year period

3

3

4

2

     2 Claims in any 5 year period

1

1

2

0

     3 Claims in any 5 year period

0

0

0

0

     4 Claims in any 5 year period

0

0

0

0

     5 Claims in any 5 year period

0

0

0

0

With No Claims Bonus Protection

     1 Claim in any 5 year period

5

5

5

5

     2 Claims in any 5 year period

5

5

5

2

     3 Claims in any 5 year period

3

1

4

0

     4 Claims in any 5 year period

1

0

0

0

     5 Claims in any 5 year period

0

0

0

0