5 Things You Need To Know About Your No Claims Bonus

What’s the number one priority for you when it comes to renewing your insurance? For virtually any rider, the realistic answer is getting the cheapest annual premium possible.

If your bike insurance is coming up for renewal soon, you might have started to compare quotes as you look to find the best price for your next 12 months' cover. However, one of the most important factors in bringing the cost down is the No Claims Bonus you have to your name.

Indeed, it’s no secret that No Claims Discount can save bikers a considerable amount of money, but how exactly does it work? In this guide, we’ll tell you the five key things you need to know about protecting, building and effectively utilising your No Claims Bonus.

But first, let’s cover the basics.

What is No Claims Bonus?

A No Claims Bonus (NCB), also known as a No Claims Discount (NCD), is a markdown on your insurance policy cost based on the amount of time you've gone without claiming. For example, if you’ve been riding for five years while insured and haven’t had to make a claim, you’ll have five years No Claims Bonus to your name.

In simple terms, your No Claims Bonus can be thought of as a reward for accident-free driving. The more time you've been riding without having to make a claim, the lower the risk you present to an insurer. That in turn means your premium doesn’t need to be as high, so your No Claims Discount plays a big part in bringing your annual outlay down.

How does No Claims Bonus work?

No Claims Discount is typically awarded on a sliding scale based on the number of years you’ve been insured and riding without having to make a claim. Figures differ between insurers but, generally speaking, one year of No Claims Bonus should garner you around 20-30% off your insurance cost. That progressively increases as you accumulate more years of no claims.

According to Which?, maximum discounts range from 40-80% and it takes anywhere from five to 15 years (depending on the rider profile) to reach the top of that scale. With such considerable reductions available, you can see just how important having a solid No Claims Discount behind you is to save on your premium.

How long does your No Claims Bonus last?

As long as you’re insured consistently and claim-free, your No Claims Bonus will build on your record – although your annual discount percentage will max out after a certain period. If you stop riding and don’t renew your policy for any reason, your No Claims Bonus does have an expiry date, but more on that below.

1. Building your No Claims Discount

There’s no secret to building your No Claims Discount. All you need to do is have a policy and remain claim-free to accumulate your bonus over the years. What is important, however, is that you ensure you’re eligible to get No Claims Discount, which can depend on the type of insurance you are protected by.

No Claims Discount is typically there for the policyholder only. This isn’t always the case, but if you're a named rider on someone else’s policy, riding a work vehicle on an ‘any rider’ policy, or riding a second or third bike, it’s likely you won’t be building your own No Claims Bonus.

If you aren’t sure if you’re eligible to receive a No Claims Bonus on your current policy, speak to your insurer to confirm.

How long does your No Claims Bonus last without insurance?

One other element to consider is what happens if you stop driving for a while and don’t take out insurance. In this instance, your No Claims Bonus does have an expiry of two years after your last policy came to an end. If you haven’t been insured for longer than that, you’ll have to build up a new one.

2. Protecting your No Claims Bonus

If you make a single claim on your insurance and your insurer pays out, you can typically expect to lose two or three years of No Claims Bonus benefit. If you make further claims, that reduction can be even greater. Every insurer has its own policy regarding how a claim will affect your policy, so it’s best to consult your policy to understand your situation.

There are also a number of scenarios where your NCD shouldn’t be affected, which again will be outlined in your policy document. For example, if you get into an accident that wasn’t your fault and your insurer recovers the costs from the driver at fault, your NCD shouldn’t be impacted.

Will a non-fault accident affect your insurance?

In the above scenario, no, but there are instances of non-fault accidents that can affect your No Claims Bonus. If you get into an accident and the other party isn’t insured, or your bike is stolen or damaged and you wish to claim for it, you may lose your No Claims Discount.

What is No Claims Discount protection?

You can get No Claims Bonus protection as an extra that you purchase alongside your insurance. Protecting your No Claims Bonus means your NCD stays intact if you make a claim, which can be especially useful in the aforementioned non-fault scenarios.

Is it worth protecting your no claims?

The cost of NCD protection can vary widely between insurers, so you’ll need to weigh up if it makes financial sense to do so. It’s worth bearing in mind that if you do make a claim, protecting your No Claims Bonus only covers the discount percentage on your annual insurance cost.

After a claim, that annual cost could rise significantly, meaning you’re still getting the same percentage discount but off a potentially much larger base figure.

Should you protect your No Claims Bonus by not claiming?

In some cases – incidents where minimal damage has been caused, for example – it might be more cost-effective to avoid claiming at all. This will keep your No Claims Bonus (and baseline premium costs) intact and avoid it being lost for the sake of a small amount of damage that requires a low-cost repair.

3. Transferring your No Claims Bonus between insurers

If you're planning on switching insurance providers, the good news is your No Claims Bonus will transfer with you. Your NCD record is attached to you as a policyholder rather than the insurer you’re with or the vehicle you drive, although No Claims Bonuses can only carry over on like-for-like policies.

Transferring your No Claims Bonus won’t necessarily be a seamless transition, as every insurer has its own rules. If you're looking to switch insurers, speak to your new provider about a no claims bonus transfer. You may find they do or don’t recognise certain policy types – for example, named riders.

4. Proving your No Claims Bonus

While most insurers probably won’t ask you for No Claims Bonus proof, it’s always best to assume they will when making a switch. You must always be honest about the amount of No Claims Bonus you have because if you exaggerate and get caught it may invalidate your policy.

How to get proof of your No Claims Discount

In most cases, insurers can validate your No Claims Bonus entitlement via an online database. But, if you need to offer physical No Claims Bonus proof, there are several ways to do so.

The primary route is to provide a copy of your last renewal or cancellation letter from your previous insurer, or your No Claims Bonus certificate. If this isn’t available, you can write to your former insurer to ask them for a letter as NCD proof.

5. Understanding who your No Claims Bonus applies to

Not every type of policy, or every person named on a policy, is eligible for a No Claims Discount. When you take out a policy or become a named rider on one, it’s important to establish whether you will be able to build your no claims bonus as part of it.

Here are a few scenarios to look out for.

Do named riders and drivers get No Claims Discount?

Generally, No Claims Discounts are designated to the policyholder only. So, if you are not the main rider on a policy but instead a named rider, you may find yourself unable to build any No Claims Discount.

It is always worth asking the insurer, though. Some insurance companies will take your named rider history into account when considering no claims.

Can you use your No Claims Discount on two policies?

You can typically only apply your No Claims Discount to one insurance policy at a time. Thus, if you’re looking to insure multiple bikes or cars, you’ll likely have to build up a second No Claims Bonus on another policy to get a discount.

This is by and large the case even with multi-vehicle policies, although some insurers may allow you to use your No Claims Discount across two policies if you meet certain criteria.

Can you use your No Claims Bonus for work vehicles?

If you ride a company bike and want to exercise the No Claims Bonus you’ve built up there elsewhere, you’ll need proof from the insurer that covers the vehicle or a letter from your employer.

If you ride a work vehicle that holds an ‘any rider’ policy, it’s unlikely you’ll be able to build up a No Claims Discount. If you’re the main rider of a bike you use both in and out of work, you should be fine to build your no claims.

Get your quote today with Carole Nash

In summary, No Claims Discount plays a major role in managing the cost of your insurance, so you should be doing everything you can to build and protect it.

Bear in mind you have several ways to manage your No Claims Discount beyond simply driving safely and avoiding incidents, including investing in a protected no claims policy and understanding when and when not to claim for minor damage.

If you’d like a motorbike insurance quote based on your no claims discount, please get in touch with Carole Nash today by calling us on 0333 005 3355 or filling out our online form.