No Claims Discount / NCD
A No Claims Discount (NCD) entitles you to a reduction in your premium: you earn the reduction if you did not make a claim on your car insurance in the previous year. Most insurers will allow you to accumulate up to five years NCD, and gain a greater reduction for each year you earn the discount. You do not generally receive any further reduction in your premium after building up five years' no claims. However, a handful of insurance providers are now offering up to nine years NCD.
Typically the discount is around thirty percent if you collect one year of no-claims, rising to sixty-five percent after five years. A few insurers also offer a seventy-five percent reduction for between nine and eleven years' NCD. If you make a claim on your car insurance, whether or not this claim results from an accident which was your fault, your NCD will be affected. Claims are generally considered to be your 'fault' if the cost of the claim cannot be recovered from a third party and must be paid by your insurance company. If you are concerned about your entitlement to NCD, or uncertain as to whether an accident has resulted in a 'fault' claim or not, you should contact your insurer.
Protected No Claims Discount
Typically, when you have made no insurance claims for four years or more, you are able to 'protect' your NCD, by paying a slight increase in your premium. This means that you can make one or two claims without losing your NCD. Whether you protect your NCD is up to you. If protecting means a large increase in your premium, and you drive an inexpensive car, you may consider protecting your NCD an unnecessary expense. However, if you plan on buying a more expensive car at a later date, which would attract a larger premium, you should perhaps protect your NCD to ensure a premium discount at this time. Even if you protect your NCD, most claims made on your car insurance will result in a higher premium when you come to renew your car insurance (see Claim History).
NCD Accelerator Schemes
Some insurers offer NCD accelerator schemes, where you can earn one full year of NCD if you do not claim over an eight to ten month period. This is especially useful for young or new drivers who will be required to pay very large premiums. Even one year's no claims discount can significantly reduce their premium: an NCD of thirty percent for one year's no claims would reduce a £1,500 policy by £450.
NCD Certificate
If you change car insurance providers at any time, you may need to prove you NCD record to your new insurer. In most cases, your car insurance renewal notice will suffice. If you wish to take a break from driving, you should obtain a NCD certificate from your old insurer, so that you can still benefit from reduced premiums in the future if you wish to drive again. Usually an insurer will only consider NCD if it was accumulated in the last two years, however. This also applies if you have been insured abroad for a period of time. Many insurers will accept NCD accumulated in an EU country, as long as you obtain a suitable NCD certificate, and this was issued within the last two years.
Multiple Vehicles
No Claims Discount can only be used on one car at any one time; you are not allowed to have NCD spread across more than one vehicle. If you buy a second family car for example, you are not entitled to NCD on both cars, unless you have earned NCD on two separate insurance policies.
Company Cars
More than half of UK firms offer their employees company cars. However, these cars are typically insured under the company's name and as such the drivers themselves do not accumulate any NCD. However, if you have driven a company car in the past and now require personal car insurance, you may be entitled to a discount. You must have driven the company car claim-free within the last two years; your employer would typically have to provide your insurer with documentation to prove this.
Named Drivers
Named drivers (see Additional Drivers) are not usually entitled to NCD; most insurers will only allow the policyholder to build up NCD. However, if you are married you can transfer your NCD into your spouse's name if you are covered by one policy. A handful of insurers do allow named drivers to build up their own NCD. The potential drawback is that you are often forced to stay with the same insurer to ensure that the NCD is recognised. In addition, you may not be entitled to as large a discount as with conventional NCD.
