What is the worth of my no claims bonus, and should I keep my no claims discount?

Your no claims bonus can significantly lower your auto insurance costs, but at what point is it no longer worth keeping?

The price of auto insurance has increased dramatically over the last 12 months, reaching a high of 861 per year on average in the third quarter of 2024.

Confused . com found that the average cost of a policy was 757 per year in the second quarter of 2025, but prices have since begun to decline.

The cost of insurance is still significantly higher than it was prior to the pandemic, even though drivers are paying less than they did at this time last year.

There are a few strategies you can use to lower your auto insurance costs. You have three options: pay in advance, think about a black box, or be careful not to unintentionally cancel your insurance.

Additionally, you can schedule the renewal of your auto insurance policy to ensure that you are purchasing it on the most affordable day.

See our article on how your job title can affect your auto insurance and how to carefully word what you do for a living for easy, practical ways to reduce costs.

While these suggestions can help you save money, maximizing your no claims bonus is one of the most effective strategies to reduce the cost of your auto insurance.

We go over all you need to know about a no claims bonus and explain how it can lower your insurance premiums.

A no-claims bonus: what is it?

When you renew your insurance, you can receive a no claims bonus, which is a form of discount. Gaining it requires establishing a record of never filing an insurance claim.

The longer you have gone years without filing a claim, the more valuable a no claims bonus usually is.

For instance, your auto insurance premiums may increase after one or two years of no claims, but you can receive a much larger reduction if you have gone the full 15 years without filing a claim.

While most insurers do offer a no claims bonus, there is no legal requirement to do so. When you are comparing quotes for auto insurance, it is worthwhile to confirm that this is the case.

How does a bonus for no claims work?

The general principle behind insurers' no claims bonuses is that you receive a larger and larger discount for each year that you do not file an insurance claim, though they frequently have slightly different guidelines.

Insurers will vary in how much their no claims bonuses are worth, and different companies will give you different discounts for each year you have not filed a claim.

According to MoneySuperMarket insurance expert Alicia Hempsted, "Your insurer will apply a discount to your policy, calculated as a percentage off your premium, for each year that you don't make a claim on your insurance."

"This discount lowers the cost of a new policy and saves you money on your current policy," she continued.

The following data illustrates the typical amount of a no claims bonus when buying a new policy.

The data comes from MoneySuperMarket and is based on auto insurance plans that were sold there between January 1, 2025, and July 16, 2025.

When you change auto insurance companies, you can typically take your no claims bonus with you. However, you will need to present documentation of your no claims bonus.

Usually, letters from insurers confirming that you haven't filed any claims, cancellation notices, or renewal letters are acceptable examples of this.

"Your new provider will honor your no claims bonus up to a certain number of years and apply that discount to your new premium when you purchase a new insurance policy," Hempsted stated. Therefore, it is wise to monitor your bonus and ensure that your insurer applies it.

Is a no-claims bonus refundable?

There are typically only two primary reasons why a no claims bonus can end.

If you need to file an insurance claim, your bonus may expire because you will no longer be eligible for the bonus since you will no longer have no claims.

Some insurance companies do not nullify your no claims bonus for every claim, even though this may seem a little harsh at first.

For instance, if you were in an accident brought on by the careless driving of another vehicle, your insurer might not be able to take away your no claims bonus.

"Your no claims discount might remain unaffected in certain situations when making a claim, like proving you weren't at fault in an accident or making a minor claim," Hempsted tells the BFIA.

These small claims, which frequently don't impact your no claims bonus, include things like misplaced keys, having your windshield fixed or replaced, or filing a claim under breakdown insurance.

Terminating your insurance is another significant way that your no claims bonus may lapse.

Since you will not be filing any claims, it is obviously illogical for the insurance company to allow you to keep your no claims bonus if you are not driving.

Most insurers will completely forfeit your bonus if you stop being insured for an extended period of time, but many will let you keep it if you just stop being insured for a few months.

The best course of action is to get in touch with your insurance company and inquire about their terms and conditions.

Is it wise to safeguard your no claims bonus?

The decision to safeguard your no claims bonus is largely dependent on your unique situation.

However, it's important to keep in mind that filing a claim will frequently result in your no claims bonus being deducted for several years, possibly even causing you to start over. To find out how much you might lose, speak with your insurer.

This won't hurt you too much if you've only accumulated one year of no claims, but if you've accumulated ten or more years, it can be hellish.

A lengthy no claims period could reduce your premiums by nearly £1,000, according to the data above. Therefore, in certain cases, paying for a repair out of pocket may be more economical if you were at fault for a minor incident.

Though every situation is unique, it is important to keep in mind that you will need to carefully consider your options.

The cost of what you are choosing to pay for instead of claiming, your chosen excess, and how your premium would change if your no claims bonus was reset are all important considerations when deciding whether to make a claim or keep your no claims bonus intact, Hempsted continued.

Even if you have a minor incident that was your fault, some insurers let you purchase specific policies that safeguard your no claims bonus.

Certain insurance companies provide protected no claims discount plans that let clients file a predetermined number of claims within a predetermined time frame without reducing their no claims discount.

The Association of British Insurers (ABI) states that you can typically make two claims over a period of three to five years without losing your no claims record.

The terms of your insurance will determine what claims you can make without deducting your bonus, so it's best to check your documents again before filing a claim or to get in touch with your insurer.

In the event that you include no claims protection in your policy, your premium may increase. But, since your premiums will skyrocket if you have less than a year without any claims, the extra expense might end up saving you money in the long run.

It's also important to remember that you must still follow the proper procedures even if you choose to handle your accident without filing a claim with your insurance. "If there is an incident, you must notify your insurer whether you are making a claim or not. Hempsted warned that failing to do so could render your insurance void and lead to later claims being denied.