What Happens to My No-Claims Bonus After a Car Accident?


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By Grace Hickman

on Thursday 14 December 2017


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What is a no-claims bonus?

If there is one term that gets given a huge amount of weight when talking about car insurance, it is that of the no-claims bonus (NCB) or no-claims discount (NCD) – they’re the same thing, even if the wording makes them seem complete opposites!

Simply put, it’s a bonus that gives you a discount on your car insurance, but you don’t get it when you first start driving.

The no-claims bonus is built up over years of careful driving. It’s actually quite simple – if you don’t claim on your car insurance for a whole year (‘no-claims’) then you get a bonus (that is to say, a discount) on your car insurance for the next year.

Don’t claim for two years and you have a ‘two years no-claims bonus’ - manage three and get a ‘three years no-claims bonus’, and so on.

Those who pass the elusive five-year mark will see a significant impact on their annual or monthly premiums, though unfortunately, most insurance companies cap out at a five-year discount and anything past that point is just icing on the cake.

When do I lose my no-claims bonus?

You lose your no-claims bonus if you make a claim on your insurance.

Do you lose no-claims if someone makes a claim against you? Yes – you lose your no-claims bonus if you make a claim on your insurance, whether that claim comes from you or a third-party.

If you had an accident where you were at fault, then both your damages and that of anyone else involved are going to be claimed against your insurance - a sure sign of losing some of your no-claims bonus.

Some? How many years no-claims do I lose after an accident?

Depending on the severity of the accident, your insurance company may take some years off your no-claims bonus rather than deleting the whole thing.

Often, an accident results in the loss of two-years no-claims, rather than the full amount. Remember, however, that NCB is capped at five years, so if you have had a perfect driving record for eight years, then have an accident and have your NCB reduced by two years, you end up with three years NCB - that’s the five-year cap minus the two-year penalty.

There are minor situations where you can make a claim on your insurance without affecting your no-claims. Check your insurance documentation for a complete list, but one usual example is windscreen repair, which you can claim for (and should – windscreens are expensive!) without touching your no-claims discount.

Is it worth protecting the no-claims bonus on your car insurance?

Many insurance companies will allow you a ‘no-claims protection’ for an extra addition to your premium.

This means, if you were to suffer a penalty to your no-claims bonus, instead - it remains as it was. You don’t generate an extra year for the year in which you had an accident, but you keep what you had going into that year.

Whether it is worth it or not becomes complicated. If you have five-years or more bonus, then losing two years from an accident isn’t the biggest hit (as you’ll still have three years NCB left) – you will probably build up those two years again with no problem and the extra cost of paying for the protection is likely just money going free to the insurance company.

If, however, you only have two-years no-claims, then an accident will wipe it out, so protecting it may be to your advantage.

In short, protecting a no claims bonus is an extra insurance gamble – you definitely lose some money paying for it, but it might save you considerably in the long run. Generally, it makes more sense for those in the middle range of no-claims (two to four years), than those at the far ends (five years or more).

Note that there are many other factors that go into calculating your annual or monthly premiums. If you have had an accident in the previous year, whether your no-claims bonus was affected or not, then it is likely your insurance premiums will increase.

Do I lose my no-claims bonus if I am hit by another driver?

Any insurance claims made in an accident that was not your fault tend to be directed at the other party’s insurance - however, there are situations where this does not happen or can become complicated.

If the other driver was uninsured and driving illegally, then they will not have insurance for you to claim on and you may feel forced into using your own insurance (and losing your no-claims in the process).

If the other driver doesn’t stop, and drives off without leaving details, then again you may have to claim on your own insurance or foot the bill for your car repairs out of your pocket.

In all these situations, that claim can decimate your no-claims bonus. Non-Fault Claims can help you save your no-claims bonus and keep your premiums low – by calling us, we can go through the legal process of recovering money for your damaged car from the other driver without involving your insurance company. Give us a call today if this has happened to you!

Can I use my personal no-claims bonus at work, or when getting temporary insurance?

Your work will have its own car insurance policy for work vehicles that may not name specific drivers (pool cars or shared vehicles, for example) and then any no-claims you have built up with personal vehicles is not immediately valid.

If, however, you are the main driver for a vehicle at work and you have a good no-claims bonus, then it is worth mentioning this to your employer as they may be able to get a discount on their insurance premiums by naming you on the policy. Make sure you check with your insurer whether an accident at work affects your personal no-claims bonus too!

When applying for temporary insurance, some companies will consider your regular insurance no-claims bonus and others will not. Again, be sure to check with your insurer if a claim on any temporary insurance affects your regular policy.

Why claim with Non-Fault Claims?

If you are making a claim for compensation after an accident that wasn’t your fault, then Non-Fault Claims can help.

We work independently to your insurers and can often make a case for compensation that they would simply overlook – not only that, but by working through us rather than putting pressure on your regular insurance, you avoid any potential loss to your no-claims bonus.

Whether you are pursuing a complicated claim against an uninsured driver, or if you have suffered a car accident injury due to an accident that was not your fault, then Non-Fault Claims can help you get the financial award you deserve.

Give us a call today or fill out our contact form to have us call you at a more convenient time.

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