If you've been driving claim-free for a few years, you've probably built up a valuable no claims bonus. At renewal time, you'll often be offered the chance to protect it for an extra fee. But is it actually worth the cost? This guide explains exactly how no claims bonus protection works, what it costs, and helps you decide whether it makes financial sense for your situation.
A no claims bonus (also called a no claims discount or NCD) is a reward for claim-free driving. For every year you complete on your car insurance without making a fault claim, you earn a discount on your next policy.
The discount builds up over time, typically following this pattern:
Most UK insurers cap the maximum discount somewhere between 5 and 9 years. After reaching the maximum, you maintain that level indefinitely by remaining claim-free.
Check out our comprehensive car insurance glossary for explanations of all the key terms you need to know.
The savings can be substantial. According to the Association of British Insurers, a five-year no claims bonus can reduce your premium by up to 60%. Some insurers offer even more, with discounts reaching 70-75% for drivers with longer claim-free histories.
In real terms, data shows that drivers with five years of no claims can save around £400-£500 per year compared to someone with no bonus at all. For younger drivers, whose base premiums are higher, the savings can be even more significant.
This is why your no claims bonus is often described as one of the most valuable assets you can build as a driver. It's yours to keep and can be transferred between insurers when you switch providers.
No claims bonus protection is an optional add-on to your car insurance policy. It allows you to make a limited number of claims, usually one or two within a three to five year period, without losing the discount you've built up over the years.
Most insurers only offer protection once you have at least four years of no claims built up. The cost typically ranges from £20 to £60 per year, though this varies depending on your insurer, your car, and your driving history.
This is crucial to understand: NCB protection only preserves your discount percentage. It does not freeze your overall premium.
If you make a claim, even with protection:
However, your discount percentage stays the same. So instead of losing your 60% discount entirely, you keep it, meaning your premium increase is less severe than it would otherwise be.
NCB protection only preserves your discount percentage. It does not freeze your overall premium. After a claim, your base premium can still increase significantly.
Without protection, making a fault claim will reduce your no claims bonus. Most insurers apply what's called a 'step-back' system rather than wiping your bonus entirely.
The most common approach is a two-year step-back for a single claim. So if you have five years of no claims and make one fault claim, you'd typically drop to three years. Make a second claim in the same period and you could lose your bonus entirely.
The financial impact can be significant. For example, if losing your five-year bonus means going from a 60% discount to a 40% discount, you could pay £200-£400 more per year until you rebuild it. Over several years, that adds up to well over £1,000.
Learn about what to do if your car insurance claim is rejected and how to protect your rights.
Not every claim affects your no claims bonus. The key distinction is between fault and non-fault claims:
Fault claim: Your insurer pays out and cannot recover the costs from another party. This typically reduces your NCB.
Non-fault claim: Another driver's insurer accepts full liability and covers all costs. Your NCB should remain intact.
Some claims are typically excluded from affecting your NCB regardless of fault, including windscreen repairs and replacement lock claims, provided you have comprehensive cover. However, it's always worth checking your specific policy terms.
Whether protection makes financial sense depends on your personal circumstances. Here's how to evaluate it:
Your no claims bonus belongs to you, not your car or your insurer. When you switch insurance providers, you can take your NCB with you.
To transfer your bonus, you'll need to provide proof to your new insurer. This is usually found on your renewal documents, cancellation letter, or can be requested directly from your previous insurer. Most new insurers give you 7-28 days from the start of your policy to provide this proof.
Important points about transferring:
Read our guide on how to lower your car insurance premium for proven strategies to save money.
Traditionally, only the main policyholder earns a no claims bonus. If you're listed as a named driver on someone else's policy, you don't build up your own NCB.
However, some insurers now offer 'named driver no claims bonuses'. This allows named drivers to build up experience that can be used when they take out their own policy with that same insurer. It's worth asking about this if you're adding a family member to your policy.
You also cannot transfer your NCB to a partner or family member. The bonus is personal to you and your driving record.
Never claim to be the main driver when someone else uses the car more. This is called fronting and it's illegal – your claim will be rejected and your policy voided.
Different insurers treat no claims bonuses differently. Some offer bigger discounts for the same number of years, while others charge less for protection. The variation can be significant.
The key is to do the maths for your own situation. Calculate what your NCB is saving you, compare that to the cost of protection, and decide whether the peace of mind is worth it.
No claims bonus protection can be a sensible investment for drivers with substantial NCB who want peace of mind. At £20-£60 per year, it's relatively affordable insurance against potentially losing hundreds of pounds in discounts.
However, it's not right for everyone. If you're still building your bonus, drive very little, or find the protection cost high, you might be better off without it.
Remember that protection only preserves your discount percentage, not your overall premium. After a claim, you'll likely still see some increase in costs. But keeping your hard-earned NCB intact can make a real difference to what you pay over the following years.
Find a deal on car insurance with or without NCB protection. Compare quotes from multiple UK insurers via Brumble.
Compare Quotes Now
As a courier, it's important you have the right level of cover, read our comprehensive guide to ensure you don't get caught short.
Student car insurance is notoriously expensive, with the average UK student paying around £2,722 per year. This guide explains why premiums are so high for those in full-time education and what you can do to bring costs down legally.
Read our comprehensive guide on Van Insurance for the self-employed that covers the essentials for tradespeople, contractors and sole traders who use their van for work.
