Best car insurance for a no-claims bonus

What is a no-claims discount or bonus?

A no-claims discount (NCD) – also known as a no-claims bonus – is a percentage discount on your insurance premium to reward you for not having made a car insurance claim in the previous year.

So if, for example, you had a no-claims discount of 30%, you'd pay £700 where you would otherwise have paid £1,000.

For each consecutive year that you don't make any claims, the discount increases. So your insurer might award you 30% for one year without claims, and five claims-free years under your belt might net you 60%.

But this also means that if you make a claim, you could lose your discount and your premium could rocket. And confusingly, insurers don't agree on what kinds of claims will affect your NCD.

We've picked out the insurers that we think are the most and least generous when it comes to their NCD schemes. 

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an insurer before committing to any financial products.

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Best insurers for no-claims discounts and bonuses compared

To come up with our no-claims discount score, we've compared eight features of how the insurers' no-claims discount schemes work. 

This includes which types of incident will and won't affect your hard-earned discount, and how many claims can be 'protected' with the insurer's 'no-claims discount protection' (we explain how this works below).

Best car insurance policies for no-claims discounts and bonuses

Aviva Car Insurance 

• Policy score: 70% – joint 7th of 76 policies reviewed
• Customer score: 70% – 3rd of 19 providers compared
• Claims score: 70% – 4th of 19 insurers reviewed

We like: Unlike the legal cover in most policies, Aviva's can pay for legal defence costs if you're prosecuted for a motor offence committed by someone who's cloned your licence plates. 

We don't like: A big admin fee (£43) if you change your mind and cancel during the cooling-off period.

• Read our expert review of Aviva car insurance.

Sainsbury's Bank Plus

• Policy score: 67% – 13th of 76 policies reviewed
• No customer or claims scores

We like: If your car is vandalised, you can make a claim without losing NCD.

We don't like: Comparatively high excesses for young drivers.

Saga Select car insurance

• Policy score: 76% – 4th of 76 policies compared
• Customer score: 60% – 15th of 19 providers compared
• Claims score: 62% – joint 12th of 19 providers compared

We like: No-claims discount protection comes as standard, whereas for most insurers it's an optional add-on.

We don't like: If Saga cancels the policy during the year, it only gives five days' notice.

Find out more: best car insurance providers in the UK

Is a no-claims bonus worth it?

By itself, a no-claims discount doesn't really tell you how much you'll pay – you need to know what the premium is to work out how much of a saving it represents.

Suppose there are two insurers. Both have a base premium of £1,000, to which the discount is applied. With insurer A, your no-claims discount is 75%, and with Insurer B, 60%. In this case, insurer A is clearly the cheapest.

But when the base premiums are different – as they're likely to be in the real world – the comparison changes. If insurer A's base premium is £1,500 and Insurer B's, £900, for instance – then Insurer B is cheaper.

Some insurers will make a point in their marketing of awarding generous no-claims discounts, but it's important to compare the final quote – with any discounts included – to determine which is the best deal. Read our guide on how to find an insurer with a lower premium.

The reason it's worth keeping your no-claims discount in mind is that you can lose it if you make a claim, meaning you'll pay higher premiums than you would have otherwise.

How can a claim affect my no-claims discount or bonus?

If you make a car insurance claim, you may lose some of your no-claims discount, according to where you are on the insurer's 'step-back' scale.

Insurers have different step-back scales, and the amount of discount you lose can depend on the scale and the number of claims made.

As one example, suppose you start your policy with five years' NCD under your belt (for the sake of this example, a reduction of 50%). 

• If you go a further year without claiming, your NCD notches up to six years and a discount entitlement of 60%.
• But claim once, and your NCD is reduced to three years – entitling you to a 40% discount. This means you'll have to spend two years paying extra premiums because of lost discount.
• Claim twice in that year, and you'll lose even more discount – and will need to spend more time recovering it.  

Is no-claims protection worth it?

No-claims bonus protection is an added extra that you can buy with your insurance.

It will prevent a limited number of claims (two or three claims over a three-year period is common) from having an impact on your no-claims bonus.

No-claims bonus protection will certainly save you money if you make a claim. However, you'll need to pay extra for it (around £60 is fairly typical), so its value depends on how much discount you'd stand to lose by claiming.

Insurers don't make this easy to find out – but they do have to show how much discount, on average, their customers were awarded for each year of no claims.

So this should give you a starting point in working out whether to pay for no-claims bonus protection.

As a general rule of thumb, the bigger your no-claims bonus the more you stand to lose through making a claim, and therefore the greater the value of the protection.

How does no-claims protection work?

A fairly common misconception about bonus protection is that it stops your premiums from rising because of a claim.

Unfortunately, this isn't true. If you make a claim and, as a result, the insurer thinks you're more likely to make future claims, it will increase your premium. After this, it will apply whatever discount you have.

So, suppose your discount is 60% and you're paying £400 instead of the base premium of £1,000. Then you make a claim – but it's protected under the added extra you've paid for.

At the next renewal, your insurer could then increase that base premium to £1,300. With the same 60% discount in place, you'd now be paying £520.

A big bonus is great – but don't ignore the premium

Dean Sobers, Which? car insurance expert, says:

'One misconception held about no-claims discounts is that if you keep or improve a good NCD through years of claims-free driving, your premiums won't go up. Sadly, this isn't the case. 

'Your underlying premium can change from year to year even if the discount stays constant. And that underlying premium can be affected by factors entirely unrelated to your driving record – such as general trends in crime levels in your area and the costs of repairing cars.

'There's still value in maintaining a good NCD, though. And there are other factors that differentiate between providers beyond how high the discount is in percentage terms. With some, you'll stand to lose some of your NCD if you claim for things that weren't your fault but where your insurer couldn't recover its costs – for example, if your car was vandalised or you were in an accident caused by an uninsured driver.

'Check to see how generous your insurer's no-claims discount policy is. Some draw attention to it in their marketing (for example a 'claims promise') but you should be able to find the details itemised in the policy wording.'

More on no-claims discounts and bonuses

How we analyse no-claims discounts

Our editorial independence means we are able to work on behalf of consumers, not insurers. That means our reviews are fair and there's no hidden agenda. 

You can read about how we calculate our customer, claims and policy scores in our best car insurance guide.

To calculate our NCD score, we look at the eight features listed below and score each one individually. The NCD score reflects the policy's total points – across all eight NCD areas – as a percentage of the highest score possible. 

• The number of years it takes to build up the policy's maximum no-claims discount
• If named drivers other than the main driver can earn their own no-claims discount
• If no-claims discount protection (NCDP) is offered
• How many claims per year are protected by the policy's NCDP.

We also looked at whether your NCD would be affected in the following scenarios:

• An incident where fault has been accepted by an insured third party, but where your insurer is still in the process of recovering its costs
• An incident that wasn't your fault, but where the third party was uninsured
• Your car is damaged in a malicious and deliberate act, such as vandalism
• Your car is hit while parked.

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