The average car insurance premium drops by £745 with a year’s no-claims discount
- The average driver pays €2,304 per year for coverage without no-claim discount
- But this drops sharply once drivers start to build up these savings
Car insurance premiums are now falling by £745 after just a year of no claims discount – the highest figure ever.
No-claim discounts (NCDs) are premium reductions that insurers grant when customers reach annual milestones in which they make no claims on a policy.
The average car insurance bill for 2023 fell from £2,304 without these discounts to £1,560 for a year of NCD, according to price comparison website Compare the Market.
That’s a drop of £745, or almost 32 per cent.
Over two years of NCD the policy falls by a further £354, or 23 per cent, and in the third year by £219 (18 per cent).
Double bad luck: having an accident and filing a claim with your insurance means higher premiums
In 2022, the average driver paid £1,520 for non-NCD cover. That fell by £507 to £1,013 after a year without a claim, then fell by an additional £249 in year two and £120 in year three.
But rising insurance premiums are still a problem for motorists, even those who have suffered from NCDs for several years.
Compare the Market says these costs have risen by £546 (54 per cent) year-on-year for drivers with one year of no damage, £441 (58 per cent) for drivers with two years and £342 (53 per cent) for motorists with three years.
Similarly, drivers with ten years without claims have seen their premiums rise by an average of £186 (54 per cent).
Insurers say premiums are rising to cover their own higher costs. These include high repair costs, cars becoming more expensive to repair, energy costs and higher wages.
However, Compare the Market’s figures are based on the premiums that drivers are offered through the platform.
They do not reflect what drivers actually pay.
Alternative figures from trade body Association of British Insurers show that the average premium paid in 2023 was £543, up from £434 in 2022.
Drivers can usually take their NCD with them when switching insurers, provided this is confirmed with their new provider and written evidence of their existing NCD is provided.
Compare the Market car insurance expert Julie Daniels said: ‘The easiest way to check your NCD policy is to look at your insurer’s documentation, which may have been sent by post or available online.
“If you can’t find the details in your renewal notice or other paperwork, you may want to contact your provider directly.”