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How a No Claim Discount Works

by Martin McRandal | 2 min read

November 13th, 2020

What is No Claim Discount?

Simply put, if you are able to provide your insurance company with proof that there have been no claims incurred under your motor insurance cover for a period of time (measured in years) then your insurance company will apply a discount to your annual premium.

The purpose of No Claim Discount is to recognise and reward customers who have not made claims against their motor policy. Insurers like to reward customers for proving that they’re less of a risk, and the No Claim Discount  is one way to reward and encourage safe driving behaviour. Generally speaking the higher the number of years for which you can provide proof of no claims the greater is the discount that an insurer will allow.

There is a well established system for presenting NCD entitlement for car and van insurance. When you move insurance providers you can request proof of NCD from your last provider. They will send a document out to you proving your NCD which you can share with your new insurance provider. Please note discounts can vary across insurers. It is also important to note that in Ireland, you earn an NCD per vehicle which means that you cannot use your earned NCD to take out more than one insurance policy.

No Claim Discount Step Back

When you make a claim on your car insurance policy your No Claim Discount may be ‘stepped back’. This means that from your next renewal date you will have fewer years No Claim Discount entitlement than you currently have.

Insurers are required to state how an No Claim Discount  operates. You will find this detailed within the terms of your insurance policy.

It is worth noting that not all claims will result in a ‘step back’ of No Claim Discount. For example, commonly insurers will not ‘step back’ No Claim Discount for a windscreen damage claim.

Where you are involved in an accident that is not your fault and make a claim under your own Comprehensive insurance cover you will find that the claim will affect your No Claim Discount entitlement whilst it remains open. Once your insurer is successful in recovering costs of your claim from the ‘at fault’ party and the claim is closed on a ‘non fault’ basis then your full No Claim Discount entitlement will be reinstated and you will receive a refund.

You should be aware that it is a ‘no claim’ and not a ‘no blame’ discount. Say your car is stolen and is damaged as a result of the theft. On dealing with your claim your insurer will ‘step back’ your No Claim Discount unless they can successfully recover their outlay from an ‘at fault’ party (i.e. from the thief).

Protecting your No Claim Discount

Most motor insurers offer the option to ‘protect’ your No Claim Discount, in return for payment of an additional premium. This option will generally be available if you have earned a minimum number of years No Claim Discount, typically 4 or 5 years.

The rules that apply to protection differ by insurer. On the Allianz private car policy, when  Protected No Claim Bonus applies, No Claim Discount will not be ‘stepped back’ where no more than two claims are incurred within a three year period. No Claim Discount will ‘step back’ only in the event of a third claim within the three year period.

 

Learn more about Allianz Car Insurance.

This guidance is for general information purposes only. Allianz accepts no responsibility or liability for any losses that may arise from any reliance upon the information contained in this guidance.

Allianz p.l.c. is authorised by the Central Bank of Ireland and authorised and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our authorisation and regulation by the Financial Conduct Authority are available from us on request. Standard acceptance criteria and policy conditions apply.

About the author

bio image for Martin McRandal
Martin McRandal

Business owner, consultant, and expert witness. Former motor and property insurance underwriter.