Car Insurance

No Claims Bonus Explained

One car insurance term that many people do not fully understand is the no claims bonus. It is important that you understand this term in order to be sure that you get the discount you are entitled to. Basically, a no claims bonus is referring to the amount of years that you have had car insurance and not had to make any claims. To put it simply, if you have had car insurance for 10 years and you have never made a claim at all, then you have a 10 year no claims bonus. The no claims bonus is one of the biggest factors that affects what you have to pay for car insurance. For every single year that you do not make a claim, you add on another year of no claims bonus to your total.

When car insurance companies see that you have gone quite a few years without making any claims, they see that you are a low risk for them to insure. So, as you can see, your history of claims is extremely important. Usually the more years of no claims bonus you have, the cheaper your car insurance cover will be for the car you are insuring.

Changing Providers

If you decide to change car insurance providers, you will have to prove your no claims bonus. Usually all you need is a letter from your previous car insurance company or even a renewal notice to show that you do have the amount of no claims bonus that you claim. Once you have a number of years on your no claims bonus, if you have to make a claim, different companies have rules on how to knock back the number of years on your no claims bonus. In some cases insurers provide you with the options to protect your no claims bonus. Usually this will cost you a small extra fee; however it can be worth the fee since you can actually save up to 75% on the cost of your car insurance with your no claims bonus.

No Fault Claims

When it comes to understanding a no claims bonus, many people seem to think that this only involves claims that you are at fault in. This is not so. When it says “No claims” it means absolutely no claims, which means that even claims where you are not at fault can count as a claim that will affect your no claims bonus. If your car is stolen or broken into, this is not your fault; however, it is going to affect your no claims bonus if you do not pay to have it protected.

There are a few small claims that may not affect your no claims discount. This may include broken windscreens or broken windows. However, it is important to note that this can vary from company to company. So, be sure that you check the small print closely to see what types of claims can affect your no claims bonus.

Why Protect Your No Claims Discount?

You can choose to protect your no claims discount by paying an extra fee, but you may not be aware of why it is so important to do this. If you have gone quite a few years with no claims at all, you are probably getting a huge no claims discount. Just one claim could change this discount, so in this case it may be worth it to pay the small fee to protect that discount. Some companies will allow you to make one claim without losing your bonus, and in some cases you may even be able to make two claims and only reduce the bonus a small amount. However, if you get any more claims, you may lose the bonus that you have.

If your driving record is excellent, it is definitely worth it to include the protected no claims bonus. Sure, you will pay a bit extra; however, if you don’t protect it and then you have an accident or have to make a claim, you could lose the bonus that is saving you hundreds of pounds each year. For a one year old no claims bonus, it may not be worth protecting, but once you rack up a few years, you will want to protect this money saving bonus if possible.

No Claims Bonus Explained

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