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Should I protect my no-claims bonus?
Updated 1 March 2023
If you don't claim on your car insurance, your insurer will give you a no-claims bonus each year – which is a future discount on your next policy. But if you need to claim, you could lose any discount you've built up, unless you pay to protect it. This short guide looks at how it works, how claims affect it, and whether it's worth paying to protect it.
What is a no-claims bonus?
A no-claims bonus (also sometimes referred to as a no-claims discount) is an optional feature of most car insurance policies, whereby if you don't make any claims in a year, you get a discount on the next year's policy as a 'reward'.
How does the no-claims bonus work to give me a discount?
Each full year you don't make a claim, you'll earn an extra year's no-claims bonus, which can result in some serious discounts. For example, a provider might give you a 30% to 40% discount if you don't claim in your first year, and then offer an additional 10% if you repeat the feat in your second year and beyond.
Insurers are essentially rewarding you for not making them pay out – the less you claim, the more profitable a customer you are for them. After a while this can make your insurance a lot cheaper.
If you want to understand more about no-claims discounts, read on. Or if you're now ready to buy car insurance, see cheap car insurance or head to our Compare+ Car Insurance tool to get quotes, plus our often one-click tricks to see if you can save.
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Will making a claim on my car insurance affect my no-claims bonus?
If you're involved in an accident and you make a claim that your insurance provider ends up paying out on, it'll typically reduce your no-claims bonus by a number of years or, depending on your provider, you could lose it completely.
There are some circumstances where you can claim on your car insurance without it affecting your no-claims bonus, though again this usually depends on your provider.
- If you’re in an accident that you can prove is not your fault, you usually won’t lose your discount, as the other driver’s insurance company will be the one to pay out.
- Some small repairs are also sometimes exempt from impacting your no-claims bonus, such as fixing cracks in windows – though this varies by provider.
For more information on how to claim, see our making a car insurance claim guide
What is no-claims bonus protection?
No-claims protection is an optional add-on to insurance premiums offered by some providers. It allows you to claim one or more times per year without impacting your no-claims bonus. You have to pay for it, and the cost and number of times you can claim varies significantly across providers.
Important. Having no-claims bonus protection will not stop your car insurance premium from increasing.
This might sound odd, but having the protection in place won't stop your insurance costs going up as a result of a claim.
Insurers will still take into account any claims you've made, and if they think you're more likely to claim in future, they'll increase your premium. After this, they'll apply any no-claims bonus you have.
Let's say your insurer has worked out that your premium should be £800, yet you've built up a discount of 50%, so you're actually paying £400. You have to make a claim, but because you've protected your bonus you keep the discount.
When you come to renew, because of the claim, your insurer decides that your premium should now be £1,000. With the 50% discount, you're now paying £500. So your premium has gone up – but the increase has been lessened by the discount.
Is it worth paying to protect my no-claims bonus?
There’s no easy answer to whether paying for the extra protection will be worth it. No-claims bonus protection is essentially getting insurance on top of your insurance, and you can't predict whether something might happen to make you need to claim on or not.
If you've built up a high no-claims bonus over the years, and losing part or all of it would make your insurance much more expensive, no-claims protection might be worth getting (depending on the price).
Can I keep my no-claims bonus if I switch insurance providers?
Yes, it's common practice that when you move to a different insurance provider, your no-claims bonus moves with you. You just need proof of your bonus to give to your new provider, which you'll typically find on your renewal letter from your old insurer. If it's not there, call your old provider to ask it to provide proof.
Note that if you switch midway through your existing policy, you may not get your no-claims bonus for that year.
Can I keep my no-claims bonus if there's a gap between policies?
This depends on the length of that gap. If you take a break from driving and no longer need insurance for a period, your no-claims bonus will typically be valid up to two years after your policy ends and should be carried over to your next policy (though you may need to provide evidence).
Any longer than that and you will have to start building up your no-claims bonus from scratch again.
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