New data reveals that drivers can significantly reduce their car insurance premiums by maintaining a single year of no-claims discount. Research from the comparison site Compare the Market indicates that car insurance premiums can decrease by £745 after one year without claims. Additionally, premiums continue to drop in subsequent years, with a reduction of £354 in the second year and £219 in the third year.
Drivers who maintain a no-claims status over an extended period stand to achieve substantial savings. On average, the price difference in insurance premiums between drivers with no claims and those with ten years of no claims amounts to £1,772.
While various factors, such as the driver's age, address, car make and model, and annual mileage, influence premium costs, having a no-claims discount can contribute significantly to cost savings.
Julie Daniels, a motor insurance expert at Compare the Market, advises drivers to check their no claims discount policy stating “The easiest way to check your no claims discount 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.”
Compare the Market's data highlights the challenges faced by motorists due to rising insurance costs. The research shows a year-on-year increase of £546, or 54%, for drivers with one year of no claims. This trend continues with increases of £441 for drivers with two years of no claims and £342 for those with three years. Even drivers with ten years of no-claims bonus experience an average rise of £186 in their premiums.
Earlier this year, research from consumer group Which? revealed that some drivers pay significantly more for their car insurance when opting for monthly payments instead of annual ones. The gap between annual and monthly payments has been growing, with monthly payers facing an average cost difference of £309 over the year in September 2023. This trend may be more pronounced among younger motorists, who typically have higher premiums.