What is No Claims Discount (NCD)?

Jason Barker • December 1, 2023

No-Claims Discount is a method used by insurance companies to encourage sensible driving behaviour. The discount is a reward for policyholders not making any claims on their insurance policy during a specified timeframe (usually a policy year).

For example, if three years go past without a customer making a claim on their policy, they will have earned three years’ worth of no-claims discount. This discount usually results in a reduction in premium costs upon policy renewal. The discount will depend on the insurance company’s specific terms and the number of consecutive claim-free years. In some cases, there may be a maximum limit to the number of years of NCD that can be accumulated, and this should be checked with insurance companies on a case-by-case basis.

NCD is usually lost or reduced once a claim is made, which is likely to lead to an increase in higher premium costs at renewal. A time where this may not apply would be if the NCD is protected, as in this instance, an insurance company may allow a number of claims to be made in a policy year before the discount is lost or reduced. A fee is usually payable for this added layer of protection.

In the event of changing insurance companies, NCD is usually transferrable, which allows customers to retain the discount even after switching. The individual terms should be checked with the insurance company in question, where applicable.

Please note that not all claims impact a customer’s NCD, so it’s always a good idea to check with the specific insurer.

Furthermore, if you’ve been involved in an accident that wasn’t your fault, we have a method here at CARS which enables you to have your car repaired without paying your excess or impacting your NCD, even if it’s not protected. Call us on 01472 453622 for further information.

Visit our blog ‘How do I choose the right insurance company for me?’ for other important factors to consider.

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