a simple guide to getting it right when buying insurance

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No Claims Discount Expires After 2 Years | Protected No Claims Discount Does Not Protect Your Premium | Manipulating Your Details to Gain a Better Price Could Invalidate Your Policy | You Don't Automatically Get Driving Other Cars With Comprehensive Cover | Should I Send Copies of Documents to My Broker/Insurer? Yes | Each Policy Earns It's Own No Claims Discount, You Can't Use It Twice | Insuring Your Child's Car In Your Name Is Called Fronting And Is Fraud! | Don't Assume Your Company Car No Claims Discount Will Be Accepted By Your New Insurer - Check First! | Counterpart Licences Abolished, You May Still Have To Provide a Code From DVLA to your Underwriters to Check Your Details | Motorbility Policies Do Not Earn a No Claims Discount | Motoring Endorsements Are Declarable For 5 Years
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No Claims Bonus (NCB) or No Claims Discount (NCD) as it is known, reduces your premium in return for having not made a claim against your policy. No Claims Bonus can give up to 70% discount on your policy for motor and 40% on home insurances. Even being just one year out can have a big effect on your premium. However, not all policies give NCD, such as Classic Vehicle Insurance, Short Period or Specialist Policies, Motor Home Insurance and not all home insurance providers give NCD.  A small token from your insurers as a thank you for not having cost them thousands of pounds in claims.  You are only awarded a years NCD if you complete the policy year without having made a claim, 364 Days is zero years NCD!

We all love a discount right? Sure, but this might not be as straight forward as you may think.  Some things you need to check, before you potentially get it spectacularly wrong:

*Some insurers give Named Driver Discount, but you as the named driver then must insure your car own car with that same insurer

**Some insurer do give company car discount - check before you buy don’t assume it will be accepted

***Classic Vehicles and MotorHomes do not normally accrue NCB, even if you’ve been claim free 10 years, these vehicles are not used as much as a private cars and as such are not a true reflection of your car driving history

If you answered no to any of the above then you need to take special care and actually check the individual insurer or brokers terms and conditions or acceptance criteria (not the comparison sites T’s and C’s).  Or speak to the broker or insurer - don’t assume what you think is or should be acceptable might not be.

Is My NCD Valid?

Most UK insurers do not accept NCD after it is 2 years old i.e. your last policy expired over 2 years ago.  Even 2 years and 1 day will not be accepted, harsh right.

You can always check with individual insurers or brokers, but as a general rule 2 years is the limit. Aviva and Axa Insurance have been known to accept NCD up to 3 years old, but check with them first or the broker you’re buying through before you buy a policy claiming a NCD between 2 and 3 years old.  Over 3 years old and you have definitely had it I’m afraid!

Did I Earn NCD In My Name*?

Most insurers say they only accept NCD that has been earned in your name.  Not as a named driver, a company car/vehicle driver or if it was in a company name and you were the Company Director.  Check with the individual broker or insurer first.

My NCD is not from the UK?

Again most UK insurers only accept NCD earned in the UK.  Some will accept foreign NCD, but you may have to get an officially translated and verified copy of the NCD from another company for those insurers that will accept foreign NCD.

Some comparison sites ask where you earned the NCD, but you still need to see what the insurer or broker accepts.  They may have an acceptance criteria that you have to agree to before you buy your policy.  If this states something different to what the comparison site is asking, then the acceptance criteria takes precedence!

Was My NCD Earned on Equivalent Policy?

You can not automatically transfer NCD between different types of policy i.e. Private Car to Van, Motorcycle to Private Car, Driving School to Private Car etc and vice verse.  You can not assume that because you have earned a NCD on one vehicle/policy type that the next will accept it.  Different policy types are rated differently and as such insurer often do not allow cross policy/vehicle type NCD. Check with individual insurer or broker first.

NB. If you find an insurer who will take your van NCD on to a Private Car (for example), that NCD then becomes Private Car NCD and may not be transferable back to a Van NCD, just because that’s where it originated, it is now Private Car NCD not Van!

My NCD is from a Company Car**?

There was a stage when most insurers were accepting Company Car NCD as eq uivalent to Private Car NCD, but it seems a lot of insurers now don’t accept Company Car NCD.  Company cars are generally under a Fleet Insurance and these kinds of policy are rated without any NCD anyway, so that is reason enough for the insurer not to accept it.  There are insurers who do accept Company Car/Vehicle NCD, but just make sure they do before you buy your policy.

Does My Policy Accrue NCD?

Not all policies accrue NCD, so just because you’ve had a claim free year it doesn’t mean the insurer is going to confirm any NCD.  Some policies are so cheap anyway that they do not get any further discounts for having been claim free.  Such as some of the following:

Motorbility Policies

Classic Cars

Motor Homes

Short Period Policies

You need to check with the insurer, it should tell you in their policy booklet, if you will accrue NCD as they will have an NCD scale and step-back if it does.

Has a Claim Affected My NCD?

A fault claim does not mean it was your fault, it could be a Fire, Theft, Malicious Damage, Vandalism or an untraced Third Party that hit your car - see Accidents and Claims.  If your insurer has paid out money and are unable to recover their costs from any other party, then it constitutes as a claim against your policy and WILL affect your No Claims Bonus.  

A claim that is open, even if the likelihood is it will settle as a non-fault claim, is classed as Fault whilst it is ongoing - again see Accidents and Claims.

Do I need to prove MY NCD?

You may be required to provide written proof of your NCD from your previous insurer or broker this is normally the renewal notice issued by the insurer or a specific No Claims Bonus letter. This should include the following:

Insurers Name and Address

Policyholders Name and Address

Policy Number

Expiry or Renewal Date (the latter on a renewal notice)

Vehicle Registration (or property Address for home insurance)

Number of Claim Free Years

Can I transfer My NCD to Someone Else?

Usually, the only people who can transfer NCD between themselves is spouses - not Common Law partners.  Most insurers allow this, but once its been transferred, you are not meant to be able to transfer it back.  Quite how a new insurer would be aware you had previously transferred it I’m not sure, but incase they did decide to check back through all your previous policies, to ensure you have actually earned your NCD yourself (unlikely scenario), you are best not transfer it back.

Can I Add NCD Together?

The only way NCD gets increased is by providing any NCD you have already earned to your new insurer and completing a year claim free with that new insurer.  If you forgot (heaven knows why) to disclose you have NCD to your insurer and they then only provide you with 1 Year NCD, you cannot then provide a subsequent insurer with that 1 Year and any NCD you earned from an insurer prior to your last insurer.

Similarly, if you had 2 cars and each earning it’s own NCD, then you cut down to 1 car, you can’t add both NCD’s together.  They are separate and will remain separate.  If you then don’t get another vehicle within 2 years that “unused” NCD will become invalid.

Protected No Claims Bonus

Protected No Claims Bonus can still step back if you have 3 or claims in a 3 or 5 year period depending on the insurer. You normally have 2 lives (i.e. 2 Claims against your policy) before step-back comes into play.

For each year you don't make a claim the insurer will give you a discount up to their maximum level, the scale for this with most motor insurers is as follows (for Home Insurance normally all of your discount is lost following a claim).

No Claims Discount Step-Back Scale

If you have had a claim the insurers will normally step back you bonus by 2 Years per incident or remove all NCB if 2 or more claims within the policy period with some insurers. For example, if you have 5 years NCB and have a claim, you will have 3 Years at your renewal. The step-back will be as per the insurers policy , so beware that if you have built up 12 Years NCB and have a claim, it could Step-Back to 3 years if the insurers Step-Back scale goes from 5+ Years down to 3. See table below:

* Protected NCD can vary between insurers, some will reduce your “number of lives” for claims in a 3 year rolling period, whereas others will take into account claims in a 5 year rolling period.  As such, if we looked at the 5 year rolling period and you have just bought your insurance on 9 years PNCD, with 1 life lost as you had a claim 4 ½ Years ago, once that claim is 5 years old (during this policy period), you will gain that life back.

Some insurers will step-back your NCD even if it is protected if you have 2 claims within a 12 month period (whilst insured with them).  Check the policy wording and the individual insurers’ step-back scale.

** This table is based on an insurers’ step-back scale which starts from 6 years, this would be regardless of how many years NCD you might have i.e. you could have 20 years NCD, but if you have a claim the step-back would go from 6 years.  Therefore, your 20 years NCD would reduce to 4 years (if not protected) should you have one claim.

NCD

Years

% Discount

NCD After 1 Claim

PNCD After 1 Claim*

NCD After 2 Claims

PNCD After 2 Claims*

NCD After 3 Claims

PNCD After 3 Claims*

1

30

0

1 Yr

1 Life Lost

0

1 Yr

2 Lives Lost

0

0

2

40

0

2 Yrs

1 Life Lost

0

2 Yrs  

2 Lives Lost

0

0

3

50

1

3 Yrs

1 Life Lost

0

3 Yrs

2 Lives Lost

0

1

4

60

2

4 Yrs

1 Life Lost

0

4 Yrs

2 Lives Lost

0

2

5

65

3

5 Yrs

1 Life Lost

1

5 Yrs

2 Lives Lost

0

3

6

67

4**

6 Yrs

1 Life Lost

1**

6 Yrs

2 Lives Lost

0

4**

7

68

4**

7 Yrs

1 Life Lost

1**

7 Yrs

2 Lives Lost

0**

4**

8

69

4**

8 Yrs

1 Life Lost

1**

8 Yrs

2 Lives Lost

0**

4**

9

70

4**

9 Yrs

1 Life Lost

1**

9 Yrs

2 Lives Lost

0**

4**

No Claims Discount or No Claims Bonus will give the biggest reduction in your premium - DON’T ASSUME you have some, read on…you might be surprised