What is a no claims discount and is it worth protecting?

A no claims discount (NCD), sometimes called a no claims bonus, is a reduction applied to your premium for each consecutive year you insure without making a claim. It builds up — commonly around 30% after one year, rising in steps to a maximum discount after roughly five years, though the scale varies between insurers.

How it is lost: making a fault claim usually removes several years at once — often two or more steps back rather than a reset to zero. Crucially, a claim can count against you even when the accident was not your fault, if your insurer cannot recover its costs from the other party. A hit-and-run or an uninsured driver typically counts as a fault claim for this purpose, which many people find deeply unfair and only discover afterwards.

NCD protection is an optional add-on. It allows a set number of claims — commonly two in three or five years — without losing your accumulated discount.

The important limitation: protecting your NCD protects the discount, not the price. Your underlying premium is still rated on your claims history, so a protected driver who claims will usually see their base premium rise; the discount is simply applied to a higher figure. This is the single most misunderstood point about the product, and it is why some people feel misled after claiming.

Is it worth it? It depends on the cost of the add-on relative to your discount and your assessment of your own claim likelihood. A large accumulated discount is worth more to protect than a small one.

Other things to know: your NCD is portable between insurers, but generally applies to only one vehicle at a time, and most insurers require proof from your previous provider. Unused NCD typically expires after two or three years without cover.