Average car insurance premium drops £745 with one-year no claims discount

  • The average driver pays £2,304 a year for cover without a no claims discount 
  • But this drops steeply once motorists start racking up these savings 

Car insurance premiums now fall by £745 after just year of having a no claims discount – the highest figure on record.

No claims discounts (NCDs) are reductions in premiums that insurers grant when customers reach yearly milestones of not claiming on a policy. 

The average driver’s 2023 car insurance bill fell from £2,304 without these discounts to £1,560 for one year’s NCD, price comparison website Compare the Market said.

That is a drop of £745, or almost 32 per cent.

For two years of NCD the policy drops by an additional £354, or 23 per cent, and in the third year by £219 (18 per cent).

Doubly unlucky: Having a crash and claiming on your insurance means higher premiums

Doubly unlucky: Having a crash and claiming on your insurance means higher premiums

In 2022 the typical driver paid £1,520 for cover without any NCD. That fell £507 to £1,013 after one year of not claiming, then fell by an extra £249 in year two and £120 in year three.

But rising insurance premiums are still hammering drivers, even those with several years of NCDs.

Compare the Market said these costs have increased by £546 (54 per cent) year-on-year for drivers with one year of no claims, £441 (58 per cent) for those with two years and £342 (53 per cent) for motorists with three years. 

Similarly, drivers with ten years of no claims have seen their premiums jump by £186 (54 per cent) on average. 

Insurers say premiums are rising to cover their own increased costs. These include inflated repair costs, cars being more expensive to repair, the cost of energy and increased wages. 

However, Compare the Market’s figures are based on the premiums that drivers are quoted through its platform.

They do not reflect what drivers actually pay.

Alternative figures from the Association of British Insurers trade body show that the average 2023 premium paid was £543, up from £434 in 2022.

Drivers can usually take their NCD with them when switching insurer, as long as this is confirmed with their new provider and written proof of their existing NCD is given. 

Compare the Market motor insurance expert Julie Daniels said: ‘The easiest way to check your NCD policy is to look at the documentation provided by your insurer, which may have been sent in the post or might be available online.

‘If you cannot find the details in your renewal notice or other paperwork, you may wish to get in touch with your provider directly.’

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