Glossary · UK
What is No Claims Discount (NCD)?
A discount on car or other insurance premiums that builds up for each consecutive year a policyholder does not make a fault claim, and which can be lost or reduced after an at-fault claim.
Full Definition
A No Claims Discount (NCD), also called a No Claims Bonus (NCB), is a reduction in an insurance premium -- most commonly for car insurance, though the same principle applies to some home and other policies -- that increases for each consecutive year a policyholder does not make a claim that is their fault, typically reaching a maximum discount (often 60-75%, though this varies by insurer) after five or more claim-free years. NCD is specific to the policyholder rather than the vehicle or the insurer, and is usually portable between insurers and vehicles: a driver switching to a new insurer, or buying a different car, can normally transfer their accumulated years of NCD by providing proof, such as a renewal letter or NCD confirmation document from their previous insurer. Making an at-fault claim (or, depending on the insurer's rules, sometimes a non-fault claim where the other party cannot be traced or is only partly liable) typically causes the NCD to reduce by a set number of years, known as 'stepping back', which increases the premium at the next renewal, though most insurers offer an optional add-on called NCD protection (or an NCD-protected policy) for an extra premium, which allows a limited number of at-fault claims within a set period without losing accumulated discount, while still sometimes allowing the insurer to increase the premium itself following a claim even with protection in place. Because NCD can represent a significant, hard-earned discount built up over many years, drivers are generally advised to check whether the cost of a small claim is worth the resulting loss of NCD and higher future premiums before deciding whether to claim on their own policy for a minor, low-value incident.