No Claims Discount and No Claims Bonus Explained

The No Claims Discount (NCD), or No Claims Bonus (NCB), is a common feature in car insurance. Simply put, it encourages safer driving behaviour. It’s a discount that car insurance customers receive if they haven’t made a claim for a set period of time – starting from 1 year.

Insurers like to reward customers for proving that they’re less of a risk, and the NCD is one way to reward conscientious and safe driving behaviour.

The way it usually works, is that you’re offered a discount on the cost of your car insurance for every consecutive year you hold a car insurance policy in your own name without making a claim. The longer you hold a car insurance policy in your own name without a claim, the less of a risk you are and the bigger the discount is likely to be.

Your No Claims Discount (NCD) will be valid in Ireland for 2 years after the expiration of your last policy (assuming that you’ve not been involved in an accident/claim since its expiration while driving under another policy – remember this would also include driving a car under a car rental policy).

No, if you have insured more than one car, you earn a No Claims Discount (NCD) on each car, separately. You must build up a No Claim Discount (NCD) on each vehicle you own separately and remember to always advise your insurer of who the main user of each car is as this is an important material fact that you must disclose.

Usually once you have had 5 consecutive years of claim free driving in your own name you will have reached the maximum discount available to you. This means that most insurance companies only take the last 5 years of consecutive driving in your own name into account when evaluating the discount value of your NCD.

The discount only applies to the policyholder, not to other named drivers on a car. Your NCD can only be used on one vehicle, so if you have two cars you cannot get this discount on a second insurance policy, unless the NCD on the second car has been earned in its own right separately. Trying to use the same NCD twice can have serious implications and is deemed as premium fraud, if you think this has occurred, you should notify your insurance company.

Your NCD can be transferred if you change your car. If you move from one insurance company to another, the NCD will be used to verify the number of years claims free driving you have in your own name as a policyholder and is deemed to be transferred to the new insurer once the policy is taken out.

When an insurer or broker asks you about your No Claim Discount it is based on the actual number of consecutive claims free years driving in your own name as a policyholder.  Some insurers offer introductory NCDs for previous driving experience as a named driver on another policy.  However, these introductory NCDs are not transferrable and it is important to advise the new insurer of the years of driving claim free in your own name as an actual policyholder, so they can calculate the NCD they are prepared to offer you as part of their quote.

Equally if you have had a claim in which you were at fault in the past five years the new insurer will calculate the number of years NCD based on your claim free period of driving.