Should you protect your no-claims bonus?

If you’re a careful driver who’s been lucky enough not to have been involved in an accident caused by an uninsured or untraced driver, chances are you’ll have a fair few years’ worth of no-claims bonus (NCB) stored up. For every claim-free (fault-free) year you are insured, you add another year’s NCB discount to your renewal or new policy. It’s one of the most sure-fire ways of reducing your annual premium so as to get cheap car insurance, with more than five years’ NCB equating to anything from 60 – 75% discount.

If you’re driving a car as a named driver (rather than as the policyholder), you won’t earn any NCB even if you’re driving regularly and not making any claims.

NCB is lost if you make a claim – for example, if the car is stolen or involved in an accident where the insurer can’t claim back the cost from another person. Even if the accident is not your fault, you can still lose your NCB if the insurer can’t get the money back from the person who is at fault.

If it’s not clear who was at fault for an accident, the fault might be attributed equally to both arties, in which case you’ll lose some or all of your NCB.

If it’s your first accident or claim and you’ve got 5 or more years’ NCB under your belt, you’re unlikely to lose all 5 years of NCB. Instead, many insurers just take away part of the NCB, for example leaving you with 2 years’ NCB. This is worth checking with a policy provider before you decide to pay the extra premium to protect your NCB – work out how much more your policy would cost if you had an accident and reduced your NCB to 2 years and compare this against the cost of the protection for your NCB.

Protecting your NCB is a way of preventing it from being lost in the event that you have to make a claim. If you have an accident or your car is stolen, and you have to make a claim, your NCB remains intact (at however many years it was set at before the accident or loss), though you might not be able to protect it again at renewal time.

If you protect your NCB your premium will still rise year on year, but not by as much as it would without the NCB.