All you need to know about no claim & excess in car insurance

Want to know more about how no claim discount and excess work in car insurance? This guide will tell you all you need to know about no claim discount and how to protect it.

There are certain terms that go hand in hand with insurance documentation - no claim discount and excess are two of them. Knowing how to navigate and utilise these elements will give you more control over your policies and help you make the most of your car insurance. So, let’s explore no claim discount and excess in more detail.

No Claim Discount

What is a No Claim Discount?

For every year you’ve been driving without claiming on your insurance, with most insurers you will qualify for a No Claim Discount (NCD), also known as a No Claim Bonus (NCB). What’s the difference between NCD and NCB? Nothing, they’re different terms used to describe the same thing; a discount that reduces the price of your car insurance that is built up over time.

With every year you have insurance in place in your name without claiming on your policy, your discount will increase. Some insurers, however, will have limits on how many years NCD they will apply.

How does a No Claim Discount work?

Every time you renew your car insurance, you should quote the number of years NCD you have earned to get the best possible quote. You can grow your NCD until you have to make a claim on your policy. At that point, if your insurer issues a payment, you’re likely to either lose or reduce the discount you’ve built. 

If you’re involved in an incident and another party was at fault, your insurer may be able to reclaim any costs from their insurer. In these cases, your NCD should be unaffected but this will depend on your insurer

However, your no claim discount may well be impacted if:

• liability for an incident is shared between parties/can’t be agreed;
• your car is stolen;
• your car is damaged by bad weather;
• other circumstances outlined in your terms and conditions.

Can I protect my No Claim Discount?

Yes, with some insurers it’s possible to protect your NCD even if you’re ‘at fault’ or your insurer can’t claim costs back. The decision to protect your NCD is personal and should take into account the cost of doing so versus the amount of discount at stake.

If you’re wondering why you should consider protecting your no claim discount, the below scenario explains how it works:

Imagine your car was damaged whilst you were visiting the supermarket. The driver that caused the incident has left without a note and there is no CCTV to track what happened. In this situation, through no fault of your own, you may have to claim on your insurance to get it repaired.

Without protection, that one claim could result in you losing a substantial NCD on your premium – a discount that you had built up through years of careful driving.

With protection, you can make your claim whilst keeping your discount in place for the rest of your insurance period. You’ll also be able to keep building your no claim discount without starting from scratch again.

How does Protected No Claim Discount work?

Again, every insurance provider is different so do read your policy carefully. For example,  you may be able to add a protected no claim discount to your policy as an optional extra, as long as you have earned four or more years NCD.

The price of your policy is not protected, of course, and can increase following a claim or a range of other factors. What would stay intact is your NCD.

How do I prove I have a No Claim Discount or check how many years I have?

When you’re going through the process of getting an insurance quote, you’ll be asked if you have any no claim discount and how many years you have. This is then used to calculate any discount you may be able to access given your insurer’s criteria.

You may be asked to provide the proof or paperwork for this and share it with your new insurer. In most circumstances, if you qualify for NCD, you will have a document outlining the details with your renewal invite or cancellation notice from a previous insurer. You may also find your NCD details in letters or emails from your insurer outlining policy details or by checking your online account. If you don’t have the confirmation or information you need, simply ask your insurer to send it to you and share it with your new provider.

It's worth being aware that NCD can have a shelf life. So, if you’ve taken more than two years away from driving or having an active car insurance policy, you may struggle to find an insurer that will honour your past NCD.

Which insurers have the best No Claim Discount policies?

Each insurer will have different terms and conditions for NCD. So, it’s always best to check the details when assessing your insurance options. When shopping around, keep in mind what’s most important to your circumstances.

• Do you have multiple cars or drivers to consider in your household?
• Do you want named drivers to accrue NCD?
• Were you previously on an ex-partner’s or family member’s policy? Do your years as a named driver count towards NCD?
• Do you want to protect the NCD years you already have in place?
• Do you want the best possible price or the chance to grow your NCD more over time?
• Do you also use your vehicle for work purposes?
• Have you built up your NCD in another country, and will the insurer accept overseas NCD?

With your key concerns to hand, you’ll be far better placed to pick a policy that works for you.

Excess

How does excess work on car insurance?

When you take out an insurance policy, there will be a compulsory excess outlined in your documents. This is the amount of money that you agree to pay to your insurance provider when you are due a payout from a claim. This excess will be outlined as the minimum amount your insurance provider will accept on its policy.

How does voluntary excess work?

In addition to any compulsory excess, you may want to add a voluntary excess. This could make your insurance premium lower for the year. Adding the compulsory and voluntary excesses together is the total amount of money you'd pay if you made a successful claim (although this would likely just be deducted from the amount of money being paid to you by your insurer).

With a voluntary excess, you can choose the total sum you’d like to add but your insurance provider may set a limit of how high this can go. When shopping around for car insurance policies, you can try adding various levels of voluntary excess to see how it would impact your quote. From here, you can decide where to balance the cost you’d outlay on a claim against the cost saving you’d make on your policy payment.

For many drivers, a voluntary excess can provide more control and help them to personalise their insurance cover. To find out more about the reasons for adding voluntary excess to your policy or to learn more about the differences between compulsory and voluntary excesses, read more on our post dedicated to the topic.