No, a claim following an accident under your temporary car insurance will generally have no effect on No Claims Discount. This is one of the advantages of taking out a temporary insurance policy with InsureDaily, as our policies are separate, independent policies, and they have no relation to the main insurance policy on the vehicle. So any claims under this temporary insurance, will avoid causing any negative effect to previously earned No Claims Discount for the driver or the car owner, in a scenario when someone is buying cover for borrowing someone else’s car.
You could imagine short-term policies as a kind of ‘top-up cover’ – or as an additional layer of cover, purchased to cover another driver whilst they use the car. In these situations, you do have two policies in place, but each policy covers different drivers.
No Claim Discount, sometimes also referred to as No Claims Bonus, is something that is earned in connection with an annual policy. It is kind of like a ‘reward scheme’, for each year you do not make a claim on your car insurance policy, you are rewarded with an increased amount of No Claims Discount, which comes off the price of your renewal premium for the following year.
It can add up to a significant amount of money saved - so now you can see why some people are so reluctant to let you borrow or drive their car under their own insurance – you could cost them extra premium for many years to come if you were to be involved in an accident!
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No Claims Discount was brought in many years ago by insurers for two main reasons;
1) to discourage customer from making small claims
in fact, to discourage you from making any claims at all! But, in reality, usually a policyholder will weigh up how much they are looking to claim for if an accident occurs compared to the amount their insurance premium is likely to increase, due to it no longer including the discount amount for ‘no claims’ when it comes around to renewal time.
2) to encourage drivers to drive safely and take extra care when driving
or it will cost you extra in your pocket when it comes around to renewing the policy. It does make you think twice when you are out driving, like assessing whether or not to turn right across a road of oncoming traffic. Do you try to squeeze through constant oncoming traffic or do you wait patiently for a suitable gap to appear? Think about the financial consequences if you were to lose your NCD? Most people will wait for a safe gap to appear, with the risk and potential costs.
Paul Daly, Director of InsureDaily, confirms, “There is a lot of sense in encouraging someone who wants to borrow your car to considering taking out their own, separate, temporary policy to cover them for a day’s insurance. Not only does it ensure that they have Comprehensive cover in place, but it also avoids the potential risk to your hard earned No Claims Discount.”
You can usually build up to a maximum No Claims Bonus level of 5 or 6 years, depending on the insurance company, which will equate to about 60% to 65% discount from the standard annual insurance premium rate – so we are talking about a big saving. With the average UK annual car insurance premium in 2024 being quoted as roughly around £995 (quoted in The Guardian paper), and this figure is including the applied discounts for NCD, you could be looking at over £2,800 per year, if you didn’t have any No Claims Discount to include. Or worse still – you managed to lose your NCD after claiming.
This table below is a guide to No Claims Discount levels, although these can differ per insurer or scheme, but in general, this are the discounts you will be saving on your policy.
| Number of NCD Years | Percentage Discount from Premium |
|---|---|
| 1 | 30% |
| 2 | 40% |
| 3 | 50% |
| 4 | 60% |
| 5+ | 65% |
Some people will point out that they have 10 years NCD and their insurer gives them 75% discount, which can genuinely be the case, but the reality is that once you reach the 5 years level, you do not tend to get significant increases after that. Some insurers or brokers also play on a bit of a ‘sales trick’, by offering what sounds like a larger discount level, but in reality you tend to find that they reach roughly the same end price.
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The rule of thumb, although it does differ with different insurers, is that for each claim you make on your car insurance policy, you revert back 2 years in your level of No Claim Discount – so 5 years NCD (65%) could become 3 years NCD (50%).
One of the most annoying points you’re likely to hear from your Insurance Broker or Insurance Company is that it is a ‘no claims’ discount, not a ‘no blame’ discount. If you are being told this statement, you have our sincere sympathies, as it probably means that your vehicle has been involved in a non-fault accident just before the renewal of your insurance was due. Which, unfortunately means, until the claim is settled 100% in your favour and all monies are recovered back from the ‘third party’ (other vehicle owner/driver involved), your own insurer will treat you as having made a claim – which means, kind of like an upsetting board game, ‘you must go back to the square one’ and go back two steps in the No Claim Discount ladder, resulting in a lesser discount amount on your renewal price.
After driving so conscientiously for so many years, when you have reach the ‘Holy Grail’ of earning yourself 5 years No Claims Discount, aka ‘Maximum Bonus’, what should you do next? Well, secure your position, of course. As mentioned earlier about how claims knock your bonus level back two steps, when you are at the top of your game, your insurer or broker should be offering you the option to protect that No Claims Bonus – and if they are not offering you this, demand it! It could save you a small fortune. The idea behind protecting your No Claims Discount is, ironically, like taking out a little insurance policy on the No Claims Discount on your insurance policy. Depending on insurer or the particular scheme, the terms can differ, but general it stipulates that even if you have two claims within a given period, say the next year, we will ‘protect’ the No Claims Discount level, so that it stays at the same level for the future years. It is highly recommended to do this when the option arises. There is a small cost for this ‘protection’ but it is well worth it, as you might pay £30 to save a few hundred pounds off future renewals.
No, unfortunately you do not earn No Claims Bonus with short-term or temporary policies. NCD rewards are just given on annual policies. Given that many of the temporary policies are for covering someone for a day or two, we hope that most drivers avoid needing to make a claim during such a short period of cover. But to compensate slightly, InsureDaily does offer loyalty discounts to customers who come back and use our service again.
