No claims bonus explained: how NCB works in the UK in 2026

What is a no claims bonus, and what is it worth?

A no claims bonus (NCB), properly called a no claims discount (NCD), is a percentage reduction your insurer applies to your premium for every consecutive year you hold a policy without making an at-fault claim. The ABI puts the discount at around 30% after one claim-free year and 60% after five. Most UK insurers cap the scale somewhere between five and nine years, usually at 70% or 75%.

It is worth more than any other lever you control. On a £1,400 base risk price — a realistic pre-discount figure for an average UK driver in an insurance group 15–20 car — a maximum 70% bonus removes £980 a year. That is why the ABI's average paid comprehensive premium of £560 in Q1 2026 sits so far below the prices new drivers are quoted: most of the market is buying with a mature discount already attached. If you want the market-wide picture rather than the discount mechanics, our UK car insurance cost index is the canonical source.

Two things are commonly misunderstood. First, the bonus attaches to you as a policyholder, not to your car — but it can normally only be used on one policy at a time, which is why a second car needs its own (usually mirrored) discount. Second, a claim does not have to be your fault to hurt you: if your insurer cannot recover its outlay from a third party, most policies treat the claim as fault-rated for NCB purposes even when you were blameless.

What one at-fault claim actually costs you

UK insurers do not usually wipe your bonus after a single claim. The industry norm is a two-year step-back: five years becomes three, three becomes one. A second fault claim inside the same three-year window normally takes you to zero. So the immediate hit for a driver stepping back from five years (60%) to three years (50%) is 10 percentage points — on a £1,400 base price, £140 a year.

That understates the true cost, for three reasons:

• The claim is rated separately. Losing discount is one penalty; carrying a claim on your record is another. Insurers ask about claims in the last five years and load the base price for them independently of the NCD step-back. Typical combined effect on renewal is £150–£300 a year for a straightforward accidental-damage claim.
• It lasts three to five years. You climb back at one year per claim-free year, so a two-year step-back takes two years to undo, while the claim itself stays declarable for five. Multiply the annual difference accordingly.
• Your excess is gone too. On a £3,699 average accidental-damage claim (ABI, Q1 2026) with a £500 combined excess, you are already £500 down before any premium effect.

The practical rule: if the repair costs less than roughly three times your excess plus one year's premium, paying it yourself and keeping the claim off your record is usually cheaper. Below about £1,200 of damage for a typical driver, self-funding wins. Above £2,500 it almost never does. Crucially, you must still notify your insurer of any incident even if you do not claim — failing to do so can void the policy.

Five steps before you decide to claim

1. Get two independent repair quotes before contacting your insurer, so you know the real number rather than a bodyshop estimate through the claims line.
2. Add up your total excess — compulsory plus voluntary. Many drivers forget they chose a £350 voluntary excess to shave the premium.
3. Ask your insurer for a hypothetical renewal price with and without the claim. Most will tell you; the FCA's Consumer Duty rules push firms to give clear, comparable information.
4. Check whether a third party is identifiable. If liability can be recovered in full, the claim should be recorded as non-fault and your bonus should be unaffected.
5. Notify regardless. Report the incident "for information only" — this satisfies the policy condition without opening a claim.

Gaps, second cars, named drivers and short-term cover

Gaps in cover. Most UK insurers accept a no claims bonus that is up to two years old. Stop insuring for longer than that and you generally start again from zero. A handful of insurers — Direct Line, LV= and NFU Mutual among them — extended their window to three years from 2024. If you are going abroad or selling your car, check your next insurer's rule before the two-year mark, because there is no appeal once it lapses.

Second cars and mirrored discounts. Your bonus can normally only sit on one policy at a time. Many insurers will "mirror" your existing discount onto a second car in the same household, but the mirrored years usually do not accrue independently — you are borrowing the discount, not duplicating it. Multi-car policies handle this more cleanly and are generally the better route if you run two or more vehicles.

Named drivers. Being a named driver on someone else's policy does not build your own no claims bonus. Some insurers now sell a "named driver no claims" or experience credit that gives a modest discount when you take out your first policy in your own name — worth asking about, but it is not the same thing and is rarely worth more than a year or two of standard NCD.

Short-term policies. Temporary cover does not earn a no claims bonus, because NCD is granted for a full claim-free year of continuous cover. It does, however, protect the car owner: if you borrow a car on your own short-term policy and have a fault accident, the claim goes on your record rather than the owner's, leaving their bonus intact. See our full guide to temporary car insurance in the UK for the costs and rules.

Proof. You rarely need paperwork any more. UK insurers verify entitlement through the Motor Insurers' Bureau No Claims Discount Database, a central register they query directly. Keep your renewal notice anyway — it is the fastest way to resolve a mismatch, and a wrongly recorded year can cost you hundreds.