subject: How a no claims bonus affects your car insurance [print this page] How a no claims bonus affects your car insurance
If you're unfortunate enough to be involved in a road accident or you vehicle is broken into, you could be very grateful for your car insurance helping you to cover the cost. However, if you make it through the year without having to make any claims, you could be rewarded by your insurer in the form of a no claims bonus (NCB) or no claims discount (NCD). These are offered in the form of reductions on the cost of your subsequent premiums.
These bonuses can build up significantly over time, meaning a motorist with many years of safe driving behind them could be paying much less for their insurance than other drivers of the same age and background. Some insurers allow these claims to build for many years, while others place a cap on the maximum amount that can be deducted from insurance premiums - typically nine years.
Some drivers fear losing their no claims bonus when they are involved in accidents or other situations that require them to make claims on their car insurance, but there are further frameworks in place to ensure their years of safe driving do not go unrewarded. If you have earned four years' worth of no claims bonuses, you may be able to apply for a protected no claims policy, which will preserve your original NCB by allowing you to make one or two claims each year on your new policy. However, you should be aware that your premiums could increase as you will have made a claim.
Even if you don't have protected no claims, your no claims bonus won't necessarily have to start from scratch if you need to make a claim on your car insurance. While you will likely lose a certain amount, your insurer may be able to limit this to a few years, meaning that a policyholder with five years' worth of NCB may only lose one of two years and still be able to enjoy reduced premiums.
If you have been driving for a number of years as a named driver in someone else's car, you will not be able to count these years towards your own no claims bonus, as NCB is only applicable to the policyholders themselves. However, if you have been driving rented or company vehicles without making claims, you should ask your insurer whether these years can be counted towards your NCB, and allow you to start making savings on your insurance premiums today.
The author of this article is a part of a digital blogging team who work with brands like Confused.com. The content contained in this article is for information purposes only and should not be used to make any financial decisions.
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