- The average driver pays £2,304 a year for cover without a loss discount.
- But this figure drops dramatically once motorists start accumulating these savings.
Car insurance premiums now fall by £745 after just one year of having a no-claims discount – the highest figure on record.
No-claims discounts (NCDs) are reductions in premiums that insurers give when customers reach annual milestones of not claiming on a policy.
The average driver’s car insurance bill in 2023 fell from £2,304 without these discounts to £1,560 for a year’s NCD, price comparison website Compare the Market said.
This is a drop of £745, or almost 32 per cent.
Over two NCD years, the policy is reduced by a further £354, or 23 per cent, and in the third year by £219 (18 per cent).
Doubly unfortunate: getting into an accident and claiming 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 a year of not claiming, then fell a further £249 in the second year and £120 in the third year.
But rising insurance premiums continue to impact drivers, even those with several years of non-communicable diseases.
Compare the Market said these costs have increased by £546 (54 per cent) year on year for drivers with one claim-free year, £441 (58 per cent) for those with two years and £342 (53 per cent) for motorists with three years.
Similarly, drivers with ten claims-free years have seen their premiums rise by £186 (54 per cent) on average.
Insurers say premiums are rising to cover their own higher costs. These include inflated repair costs, rising car repair costs, energy costs and rising wages.
However, Compare the Market’s figures are based on premiums quoted to drivers through its platform.
They do not reflect what drivers actually pay.
Alternative figures from the Association of British Insurers trade body show the average premium paid in 2023 was £543, up from £434 in 2022.
Drivers can generally carry their NCD with them when changing insurers, provided this is confirmed with their new provider and written proof of their existing NCD is presented.
Compare Market car insurance expert Julie Daniels said: ‘The easiest way to check your NCD policy is to refer to the documentation provided by your insurer, which may have been sent by post or may be available online.
“If you can’t find the details in your renewal notice or other documents, you can contact your provider directly.”