How the no claims bonus works
A good no claims record makes your car insurance cheaper. Here’s how the bonus works and what you can do to get the best no claims discount in Ireland.
What is a no claims bonus?
It’s a discount on car insurance that rewards safe and secure motoring.
Also known as a no-claims discount, the bonus is based on the number of consecutive years you drive without claiming on your car insurance. The more claim-free years you earn, the bigger your discount gets.
How does the no claims bonus work?
For every year you have car insurance and don’t make a claim you’ll build an extra year of no claims bonus (NCB). By not claiming, you are signalling that you are a safe and responsible car owner to your insurer.
Each insurer has its own discount scale, which corresponds to the number of claim-free years. The maximum discount in Ireland is 75%, but you’ll need at least five years of no claims to get this.
Some insurers offer a claims discount after just one year, while others may not start until later.
Your no claims bonus in practice
If you’ve been driving for five years and haven’t made a claim on your car insurance, you’ll earn five years no claims discount.
As a reward for not claiming on your insurance for five years, your insurer will apply a discount of 60% to your premium.
So if your annual premium is €700, once your no-claims discount is applied, your cover will be just €280, a saving of €420.
How much no claims discount do insurers offer?
You can get up to 75% discount on your car insurance policy, depending on which insurer you choose and how many years of no claims you have.
Here’s a summary of the discounts main car insurers in Ireland offer:
|Insurance provider||Maximum discount||No of NCB years|
|FBD Insurance||75%||5 years|
|Liberty Insurance||60%||9 years|
|The AA||50%||5 years|
Can you keep your no claims if you change car?
You can usually transfer your no-claims bonus if you buy another car. However, your bonus can only be used on one vehicle at a time, and if you try to apply your NCB to two different cars, it’s considered fraud and you could be penalised.
You’ll need proof of your no-claims bonus if you buy another car.
What if you switch insurance companies?
Your insurance company should provide proof of your bonus at the end of your policy term, so when you switch you can pass this on to your next provider.
Some insurers will provide your proof of no claims in the car insurance renewal letter or email. If you have an online account, the information you need will likely be available for download or print.
If you don’t have written proof of your no-claims record, you can ask your insurer to send it.
Bear in mind that if you switch insurers before your policy year ends, you won’t get the NCB for that year.
Can your no claims bonus expire?
If you don’t have a car for a while or have an insurance gap, some insurers may allow you to keep your no-claims bonus intact for up to two years.
It’ll be more challenging to find an insurer that considers your previous no-claims bonus if you don’t have an insurance policy for more than two years.
Consider contacting the insurer you built your no claims with and ask if they will take your previous record into account.
Can it be transferred to a van or motorbike?
No, your no-claims bonus is non-transferable to other vehicles. If you have a no-claims bonus on your car and decide to trade your vehicle for a van - you will have to build your discount from scratch.
Similarly, if you own a car and a motorbike, your NCB will only apply to your car insurance and the motorcycle NCB needs to be earned independently.
NCB and multi-car insurance
If you have a multi-car policy, each driver gets their own no-claims bonus.
This means that if one person makes a claim and loses some of their NCB, it will not affect the no-claims discount of other people on the multi-car policy.
This also means your claims bonus can’t be passed on to someone else and can only be used on one vehicle.
How making a claim affects your no claims bonus
When you make a claim on your car insurance, your no-claims record is reset and you may lose all or some of your discount when it’s time to renew your cover.
You’ll also lose all or some of your NCB if you’re in an accident and the other party makes a claim against you.
Do all claims affect your bonus?
No, there are types of damage or incidents that won’t affect your NCB if you have to make a claim.
Here’s what typically counts and what doesn’t, although each insurer will have different rules, so check your policy before starting a claim.
What counts against your NCB
What doesn’t count
How long can you keep a no claims bonus?
This depends on your claim history and whether you’ve paid to protect your NCB. The years required to reach the maximum discount will vary between insurers.
It’s best to consult with your insurance provider or refer to your insurance policy documents for specific information about how long you can keep your no-claims bonus.
They will be able to provide you with accurate information regarding the duration and transferability of your no-claims bonus.
You’ll likely need to explain the lapse of insurance if there’s a gap between a new policy and when your last policy expired.
How to protect your no claims bonus
You can pay extra to protect your no-claims bonus. The add-on is usually called a No Claims Discount Protection or a Protected No Claims Bonus.
This prevents you from losing all the no-claims discount you’ve earned if you have an accident, but you’re usually only protected against one claim in a set period.
For example, you could make one claim in a three year period and keep your full no-claims discount. However, making a second claim may reduce your discount to zero.
You may not be able to protect your NCB before reaching a set number of years, e.g. four years. Similarly, if you make a claim that reduces your no-claims bonus to zero, you’ll need to build some years back up before you can protect it again.
What no claims discount protection is on offer?
Below is a table which shows the number of claims you can make with a protected no-claims bonus in a set timeframe before your NCB will reduce:
|Insurance provider||No of claims||Set period|
|AIG||2 claims||5 years|
|AXA||1 claim||1 year|
|FBD Insurance||1 claim||2 years|
|Liberty Insurance||1 claim||1 year|
|The AA||1 claim||3 years|
|123.ie||1 claim||3 years|
What is step back protection?
Step-back protection is another way of protecting your no-claims bonus, which costs less.
If you make a claim, your discount may step back to a lower level. For example, you may lose one to three years of your bonus, or your no-claims bonus may drop from 60% to 40% depending on the insurer’s policy.
Step back no claims protection isn’t as comprehensive as standard no claims bonus protection, which is why it’s cheaper. You’ll need a minimum number of years NCB to be able to buy this add-on.
Is it worth protecting your no claims bonus?
A No Claims Bonus Protection can add up to 10% to your premium cost, so you’ll need to trade off how much protection you want against the added cost to your policy.
Over time, full bonus protection may cancel out the amount of no-claims discount you’ve earned if you don’t make a claim, so it’s a case of weighing up your risk of accident, fire or theft against the cost of protection.
Remember that after you’ve made a claim, your premium will go up regardless because you are paying to protect your discount rather than the cover.
Tips to find the best no claims bonus
If you haven’t claimed for five years or more, it makes sense to seek an insurer offering a generous no-claims discount, but follow these tips to ensure you’re getting the best value cover.