A common feature of most Car Insurance policies in the UK is the No Claims Discount or No Claims Bonus.
The basic intention of a No Claims Discount is to reward policyholders who do not make a claim under their policy. No Claims Discount is earned or built up over a number of years and increases at each renewal (up to a pre-defined maximum level) provided no claims have been made during the previous insurance year.

Please note, not all claims will affect No Claims Discount. For example, if a claim is the fault of another party (or parties) and a full recovery of the insurer's outlay is made, No Claims Discount will usually be maintained. In addition, Windscreen or Glass claims will not normally affect No Claims Discount.

Someone purchasing Car Insurance for the first time will not have any earned No Claims Discount and therefore will usually start at a NIL No Claims Discount level (0%). Under certain circumstances, some insurers may allow a new policyholder without any No Claims Discount, a special Introductory No Claims Discount to give them a 'start' building up their No Claims Discount. See also Pass Plus Discount and Company Car No Claims Discount below. TOP
 
Different insurers operate varying No Claims Discount scales, ranging from 0% (zero No Claims Discount) to, in some cases, as much as 70% No Claims Discount (Maximum No Claims Discount). It is important to note that just because an insurer operates a higher maximum No Claims Discount does not automatically mean their premiums will be lower, since their gross premiums (i.e. before No Claims Discount is deducted) may be higher.

The following illustrates a common No Claims Discount scale:

No of Claim Free Years No Claims Discount
130%
240%
350%
4+ years60%
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As explained earlier, there are exceptions where a claim will not reduce No Claims Discount, however under normal circumstances a claim under a Car Insurance policy will result in a reduction to the No Claims Discount. By how much the discount is reduced depends under the insurer's 'step-back rules - usually 1 or 2 years based upon the insurance policy's NCD scale.

Obviously, reduction to a No Claims Discount (or its loss entirely, due for example to multiple claims) can have a significant effect on insurance premiums, particularly for higher premium policies where the effect of a reduced (or lost) No Claims Discount will be felt the most.

Most insurers now offer the option to 'insure' a No Claims Discount, known as a Protected No Claims Discount, but also (less commonly) known as a Guaranteed No Claims Discount.

Where an 'unprotected' No Claims Discount may be reduced because of one or more claims, a Protected No Claims Discount will be maintained and not be reduced. Note, many policies have limits on how many times you can claim against a Protected No Claims Discount, without it being reduced. For example, a common Protected No Claims Discount limit allows for up to two claims in any five year consecutive period. In this case, the first two claims will not result in any reduction to the No Claims Discount, however a third claim will reduce theNo Claims Discount in accordance with the insurer's 'step-back' rules. TOP
 
Pass Plus is a training scheme designed for new drivers by the Driving Standards Agency (DSA), with the help of insurers and driving instructors. You can take it at any time within the first 12 month of passing your test.

The Pass Plus training includes gaining valuable driving experience safely, including how to deal with a wide range of road and traffic situations. Pass Plus helps to accelarate the learning process, building on existing skills and knowledge.

Once you have completed the Pass Plus course, you will be given a Pass Plus Certificate, entitling to special Pass Plus discounts from participating insurers. In some cases, the discount can be equivalent to one year's No Claims Discount, as much as a 30% saving. TOP
 
Whilst No Claims Discount is designed to reward careful drivers who do not make claims, No Claims Discount can only be earned if you insure a motor vehicle in your own name. Being a named driver under someone else's policy does not entitle you to a No Claims Discount (although this may go in your favour and may help you in obtaining an Introductory or Starter No Claims Discount in the future); it is the policyholder who earns the No Claims Discount entitlement.

This system does present a disadvantage to company car drivers, for example when the driver retires or changes jobs. Since company cars are normally insured in the company's name (and not the driver's), it is the company which benefits from any No Claims Discount earned due to driver's good driving record. Therefore to reward ex-company car drivers who lose their company car entitlement due to retirement or change of position, some insurers will allow the driver a No Claims Discount, based upon the number of years of their claim-free driving. A letter from the driver's previous employer will normally be required by the insurer to order to allow the discount. TOP