A no claims discount (NCD) or no claims bonus (NCB) is applied to a car insurance policy for each year where there have been no claims made.
For example if you have driven for 5 years with your own insurance policy without making a claim, then you can receive 5 years NCD or NCB on your insurance policy.
No claims discounts and how it affects your car insurance
Building up your no claims discount demonstrates that you are a lower risk driver which can result in a cheaper car insurance premium. Car insurance companies will apply there own NCD rules so they may vary.
If you do make a claim then this will have an impact on any NCD you have built up although you don’t necessarily lose all of it. For example if you have 4 years NCD and you make a claim you may only lose 2 or 3 years at renewal but if you have 1 or 2 years NCD then its likely that you would lose it all. Although individual car insurance companies will apply different rules, so it best to check directly with your insurer.
Protected no claims discount
If you choose to protect your NCD you then pay an additional charge on your car insurance premium. This means that if you need to make a claim your NCD remains protected. However, NCD protection does not protect the overall price of your insurance policy. The price of your insurance policy may increase following an accident even if you were not at fault. Individual car insurance companies have their own rules regarding how many claims can be made and NCD is not affected. It is worth checking with your insurer to understand how their policy works.