Finance glossary
No Claims Discount — NCD
Also known as: NCD, No claims bonus, NCB
In simple terms
A no claims discount is a reduction on your premium that you earn for each year you insure without making a claim. The more claim-free years you build up, the bigger the discount.
On this page
What does no claims discount mean?
A no claims discount (NCD), also called a no claims bonus, rewards you for not claiming. For every full year without a claim, you build up another year of discount, which is applied to your renewal premium.
It is most common on car insurance but can apply to other policies too. After several claim-free years the discount can be substantial — often cutting the premium by a large percentage.
How a no claims discount works
Your years of NCD are recorded by the insurer and can be transferred if you switch. Make an at-fault claim and you usually lose some years; the exact reduction varies between insurers.
You can often pay extra to “protect” your NCD, so an agreed number of claims will not reduce it. Protection guards the discount, though — not the premium itself, which the insurer can still increase.
How could this affect me?
A big NCD can save you a lot, so it is worth weighing a small claim against the discount you could lose plus the higher premium that follows. Sometimes paying for a minor repair yourself works out cheaper.
Keep proof of your NCD when you switch insurers, as they will ask for it. If someone hits you and it is fully their fault and recovered, your NCD should normally be unaffected.
Things to watch out for
- One at-fault claim can wipe out several years of discount.
- “Protected” NCD protects the discount, not the premium — your price can still rise.
- A discount is a percentage off a base price the insurer sets, so a big discount off a high base may not be a bargain.
- You need proof of your NCD when switching — keep the renewal documents.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- ABI, No claims discount explained (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, No claims bonus and how it works (opens in a new tab). Accessed 22 Aug 2026.