No claims discount explained

A no claims discount is a reduction in your insurance premium that grows for every year you go without making a claim. The Financial Ombudsman Service puts it simply: for every year of driving without making an insurance claim, a policyholder is awarded one year of no claims bonus¹. Those years are then exchanged for money off the price. The industry's own guide describes it as "a rebate of premium given to an insured person by an insurer where no claims have been made by that insured", and notes it is very common in motor insurance².

The size of the reduction is not fixed by any rule. The Ombudsman is clear that the amount of discount for a no claims bonus is not set and varies between insurers¹. As a rough guide, the discount usually amounts to a reduction of 30% on your premium in the first year, rising in annual steps to a maximum of 60% or 65%³. Your bonus is always a whole number of years, never months or fractions¹.

Because the discount can be worth more than half the premium at its top level, it is one of the most valuable things a motor policy builds up. This page explains how it accrues, what a claim does to it, which claims leave it alone, what protection actually buys, how to move it between insurers and where to complain if it is handled wrongly.

What a no claims discount is and how you earn it

A no claims discount, also called a no claims bonus, is earned by completing insurance years without claims. The Ombudsman's rule is that an extra year of bonus is only added if you have not had any claims in the policy year¹. So the unit of earning is the policy year: twelve months of cover with no claims paid out under it adds one year to your record.

Two things follow from that. First, the bonus belongs to the policyholder named on the policy, not to the car and not to anyone else who drives it. A named driver on someone else's policy cannot themselves build up more no claims years on that policy, although some insurers do reward named drivers who do not claim, but only if they renew with the same insurer⁵. Second, a part year does not count as a full one. The Ombudsman would not expect an insurer to award a no claims bonus for a full year if the customer has not completed the whole year on the policy, for example a 12 month policy cancelled after 11 months⁶.

The bonus is also fragile in a way many drivers do not expect: it does not last forever if left unused. If a driver does not have an insurance policy as the main driver for two complete years, they will lose all of their no claims discount⁵. That catches people who stop driving for a while, or who spend years insured only as a named driver on a partner's policy.

The same idea appears outside motor insurance. Private health insurers also operate no claims discounts, where claiming tends to push the premium up⁷. Classic car policies are different again: insurers there often give a discount in other ways, for example if you limit your mileage, rather than through a no claims bonus⁸.

How the discount grows: from 30% after one year to 60% or 65%

The discount is a ladder. The British Insurance Brokers' Association (BIBA) guide gives the shape of it: the first claim-free year usually amounts to a reduction of 30% on the premium, and the discount then rises in annual steps to a maximum of 60% or 65%³. NFU Mutual's car insurance illustrates the first rung, showing 30% for one year without a claim⁹.

The exact percentage for each year of bonus is set by each insurer, and two insurers can price the same number of years differently. That is why the Ombudsman insists the discount amount is not set and varies between insurers¹, and why the number of years, not the percentage, is the figure that travels with you when you switch. A new insurer applies its own scale to your years.

The maximum matters less than it might seem, because most claims do not wipe out a bonus completely, they step it back. But the maximum does set the ceiling on what the ladder can earn, and some insurers cap the number of years they will count at all¹. A driver with a long claim-free record may find that an insurer counting fewer years offers the same discount as one counting more.

How many years count: limits and gaps

Insurers do not have to count unlimited years. Some may limit the number of no claims bonuses you can have¹, so a driver with a very long record may find the extra years earn nothing more at that insurer. The step-back rules also bite at five years: most insurers step back from 5 years even if you have more bonus than this, so in most cases a claim will leave you with 3 years¹.

The other limit is the gap rule. If you go two complete years without being the main driver on a policy, you lose all of your no claims discount⁵. This is the rule that catches people returning to insurance after a break, and it is worth knowing before you let a policy lapse.

For couples who share one car, there is a workaround that the facts support: change the policy from one year to the next, swapping the main driver between you, so that each partner keeps a live main-driver record and neither falls into the two year gap⁵. Each partner still only builds years in the years they are the main driver, and the other named driver cannot build up more no claims years on the policy⁵.

What happens to your discount when you make a claim

A claim where you are at fault steps your bonus back. The normal reduction is 2 years, though insurers should explain in their policy how any reduction would be worked out¹. The Ombudsman's worked example: if you had 4 years unprotected no claims bonus and you have a fault claim, your bonus will be reduced to 2 years¹.

The step-back is not a punishment the insurer invents after the event. The Ombudsman's position is that when a claim has been made, it is normally fair to reduce a no claims bonus in line with the insurer's step-back process, as long as this was made clear to the customer when they took the policy out⁶. So the key document is the policy you bought: if the step-back table was in it, the reduction is fair game; if it was not, you have grounds to complain.

The reduction is not necessarily permanent in every case. If a claim is settled in the policyholder's favour, a reduction in the bonus should only last until the claim is settled⁶. And once the claim is behind you, the ladder starts again: each claim-free policy year adds one year back¹.

One more thing worth knowing: if you cannot prove your years to an insurer that has asked for proof, it can act on that. AXA, for example, states that without acceptable proof it will remove the discount and charge an additional premium¹⁰.

Non-fault claims and claims that usually leave your discount untouched

Not every claim costs you years. The Ombudsman's consumer guidance draws a clear line around non-fault accidents: if it has been found that you were not at fault for the accident by the renewal date, your no claims bonus will not be affected, regardless of whether the claim is closed or not¹. The insurer should only treat an incident as a claim if it receives a claim from the other driver, the third party¹.

Where fault has not been decided yet, the position is more delicate. BIBA's guidance is that a protected or guaranteed bonus should be preserved following an incident, but an unprotected one may be stepped back until the claim is resolved and a recovery is made in full from the guilty third party³. So an open non-fault claim can temporarily cost you years, with the expectation that they are restored once the other side pays up.

If you pay for the damage yourself rather than claiming, your bonus should be untouched. Which? notes that you do not have to submit a claim to your insurer if you pay for repairs yourself or recover them from the other driver, if you wish to preserve your no claims discount¹¹. Where a customer reported an accident but paid the other person themselves, the Ombudsman expects the claim to be recorded as "notification only", with no reduction of the bonus⁶. The same label applies on the consumer side: the claim should be recorded as notification only and there should be no reduction of your no claims bonus¹.

Other claims sit outside the bonus as well. Claims made under motor legal protection, an optional extra, will not affect your no claims discount¹². Some policies add specific protections: NFU Mutual states that if you are hit by an uninsured driver and provide that driver's details, your no claims discount is protected and you pay no excess⁹. At the other end of the scale, claims for damage caused by weather, such as flooding, can cost you some or all of your discount, depending on your insurer's rules¹³. And if a garage damages your car and you claim on your insurance for the repair, you might lose your no claims bonus¹⁴.

Windscreen claims

Windscreen and glass claims are the common exception drivers ask about, and the answer is reassuring. Which? reports that claiming to get a small chip in a car windscreen fixed will not affect a no claims discount, and that it is possible but unlikely that a single windscreen claim would affect the premium for the forthcoming renewal¹². Insurers say the same in their own terms: esure's policy booklet states that claiming for a windscreen does not affect your no claims discount¹², and AXA states that a claim for windscreen damage will not affect the discount at renewal¹⁰.

Two cautions go with that. The treatment of glass claims is set by each insurer in its own policy documents, so the position on your policy is the one that counts. And a windscreen claim is still a claim: it will be on your claims history, and you must declare it when a new insurer asks about claims, even though it did not cost you any years.

Protecting your no claims discount

Protection is an add-on that changes one thing and not the other. The Ombudsman's guidance is that in a lot of policies, a protected no claims bonus means the amount of your bonus will not change if a fault claim is recorded, but this does not mean the price is protected¹. In other words, the years survive the claim, but the premium can still rise because the insurer prices the claim itself into its calculation.

The scope of protection is narrower than many buyers assume. AXA's van insurance terms spell out a common structure: in return for paying a small additional premium, you can make one claim without it affecting your discount at renewal, but if you make a second claim within the same period of insurance, the discount is no longer protected and will be reduced¹⁰. Protection is also not the only route to keeping your years after certain incidents: as noted above, uninsured driver protection on some policies preserves the discount without needing the paid-for add-on⁹.

Whether protection is worth the extra premium depends on the price quoted and your own view of the risk. What the facts allow is a clear statement of what it does and does not buy: it buys the survival of your years after a fault claim, it does not buy a flat premium, and on some policies it only covers the first claim¹. The dedicated page on protected no claims covers the decision in more detail.

Moving your no claims discount to a new insurer

Your years belong to you, not to the insurer that watched you earn them, and they transfer when you switch. The Ombudsman's business guidance confirms a policyholder can cancel their policy and set up a new one with a different insurer whenever they want, even if a claim is ongoing, though the claim will still affect the bonus⁶. If a claim is settled with the policyholder at fault, the old insurer should release proof of the bonus, taking off a loss of discount for the claim, and should not withhold a bonus that has been earned, although the Ombudsman might not interfere if the customer owes the insurer money⁶.

Proof is the practical hurdle. A new insurer will ask for evidence of your years, and AXA's requirements are a typical example of what acceptable proof looks like: a specific proof of no claims discount letter, or the most recent renewal schedule from your current insurer, on its own headed paper, showing the other policy was issued in the same name, the registration number of the vehicle, the date the policy ended and the number of years available for transfer¹⁰. Send it promptly: without proof, the discount can be removed and an additional premium charged¹⁰.

There are limits on what can be transferred. AXA, for example, accepts transfers only from a private car or another van policy, not from motorcycle, motor trade, motorhome or fleet policies, and only from a previous UK insurer¹⁰. If your years exceed what the new insurer will count, the Ombudsman still expects the insurer to provide proof of the amount you came with, unless it had always made clear it would not⁶.

Second cars raise a separate question. The bonus cannot simply be spent twice, but some insurers offer a mirror no claims discount, copying your earned years onto a second vehicle you have not previously insured, subject to conditions such as the new policy being in your own name and your still earning the discount on the other vehicle¹⁰. The link runs both ways: the Ombudsman would only expect the premium on the first vehicle to increase if the bonus is transferred to the second vehicle⁶.

Disputes over fault claims and lost bonuses: complaining to the Ombudsman

Disputes about no claims bonuses are common enough that the Financial Ombudsman Service publishes dedicated guidance on them, updated in September 2026, and handles each case individually because bonuses and the way they are applied varies between insurers⁶. The Ombudsman does not think it fair for an insurer to withhold a bonus that has been earned, though it might not interfere if the insurer has done so because you owe it money¹.

Where a bonus has been wrongly reduced, the Ombudsman can put it right. If a protected bonus was not applied as it should have been, the Ombudsman will probably tell the insurer to refund any extra money the customer has paid⁶. Where a customer disputes the figures, the Ombudsman usually says it is reasonable for the insurer to give a letter setting out the amount of bonus the customer started the policy with, the insurer's maximum, and how the bonus has been affected after a claim⁶.

The route is fixed, and the first step is not optional. The Ombudsman's own advice is to talk to your insurance provider first, as it needs to have the chance to put things right⁴. If the insurer does not reply within the time limits, or you disagree with its response, you can bring the complaint to the Ombudsman¹⁶. Insurers must tell you this: FCA rules require the policy summary to state that complaints may subsequently be referred to the Financial Ombudsman Service¹⁷.

Complaining to the Ombudsman is free⁴, though the scheme has conditions, including time limits for making a complaint and limits on the amount of compensation that can be awarded¹⁸. The general page on complaining about an insurer covers the process, deadlines and what to include.

Frequently asked questions

Is a no claims bonus the same as a no claims discount?

Yes. The two terms mean the same thing and are used interchangeably by insurers and drivers. Strictly speaking, the years you build up are the bonus and the money off your premium is the discount those years earn, but in practice an insurer quoting your "no claims discount" and one quoting your "no claims bonus" is talking about the same figure. Your bonus is always a whole number of years, and the discount it buys varies between insurers because no standard amount is set.

Do I lose my no claims bonus if the accident wasn't my fault?

Usually not. If it has been found that you were not at fault by your renewal date, your bonus should be unaffected, whether or not the claim has closed. If it is not yet decided, an unprotected bonus may be stepped back temporarily until the claim is resolved and the costs recovered in full from the other driver's insurer. If you paid for the damage yourself rather than claiming, the incident should be recorded as notification only, with no reduction.

Does a windscreen claim affect my no claims discount?

Normally no. Insurers state that claiming for windscreen or glass damage does not affect your no claims discount, and a single windscreen claim is unlikely to change your renewal premium either. Check your own policy booklet, because the treatment of glass claims is set by each insurer, but the common position is that a chip or crack repair leaves your discount untouched while still counting as a claim you must declare when asked.

How do I prove my no claims discount to a new insurer?

Ask your previous insurer for proof, usually a renewal schedule or a specific proof of no claims letter on its headed paper. It should show the policy was in your name, the vehicle, the date the policy ended and the number of years you had. Send it to the new insurer when asked, and do it promptly: insurers warn that without proof they can remove the discount and charge an additional premium.

Is it worth protecting my no claims bonus?

Protection costs extra and it keeps the number of years intact after a fault claim, but it does not stop your premium rising, because the price is worked out separately from the bonus. Policies also vary on how many claims are covered: one provider protects the first claim but reduces the bonus if a second claim follows in the same insurance period. Whether it is worth it depends on the extra premium quoted and how likely you think a claim is.

Can I use my no claims discount on a second car?

Not twice at full value, because the years normally attach to one policy. Some insurers offer a mirror discount, which copies your earned years onto a second vehicle you are insuring for the first time, subject to conditions such as the policy being in your own name. Transferring the bonus to the second vehicle is what would push the first vehicle's premium up, so the two are linked. Named drivers generally cannot build up their own years on someone else's policy.

What discount will I get after five years without a claim?

There is no fixed answer, because the discount for a given number of years is set by each insurer. As a guide, the discount typically starts at around 30% after one claim-free year and rises in annual steps to a maximum of 60% or 65%. Five claim-free years will put you at or near most insurers' top level, though some cap the number of years they count, and most step back from five years after a claim.