So, maybe you've bagged a good deal on a car insurance policy by being savvy and making your insurance as cheap as possible.
Well, how about making those premiums even cheaper?
That's exactly what a no claims bonus is all about.
We'll be telling you what they are and how they work.
How Does the No Claims Bonus Work?
Basically, if you drive for 12 months without having to make a claim on your car insurance policy, you get rewarded with what's called a no claims bonus.
What this does is give you a discount on next year's premiums, whether you're renewing with the same company or switching to another insurer.
That discount increases with each additional year that you don't make any claims, up to a maximum of 15 to 20 years – at which point your discount won't increase any further.
How Much No Claim Bonus Discount Will I Get Each Year?
How much discount you get each year differs from insurer to insurer, so always be sure to shop around the market for the best deal.
The discount will usually start at around 14% and then increase more slowly by 2-5% each year, so you'll be making the biggest savings in the first year.
Let's say a year's worth of car insurance costs you £1000, and your no claims discount is 14%.
14% of £1000 = £140 savings.
Not bad, eh?
How Can I Get Proof of My No Claims Bonus?
You don't want to lose out on those precious savings, do you?
Luckily, there's a number of ways to prove your no claims discount:
-
By contacting your insurance company and asking them how much no claims bonus you have
-
Using your car insurance renewal letter, which will state your no claims bonus and how many years it's worth
-
If you've switched insurance providers, your cancellation documents should contain proof of your no claims discount
Can Named Drivers Build Up No-Claims Bonus?
Usually not, no.
Otherwise, you'd just put your name down on all your family's insurance policies, wouldn't you?
That being said, there are a few insurance providers who do allow named drivers to build up a no claims discount on someone else's policy.
The catch is that you may be required to stay with that insurer in the future in order to receive the bonus.
Can I Take My No Claim Bonus With Me from Another Insurer?
Yes, it's very common.
Your previous insurer will send you your renewal notice and your no claims proof, which you'll then have to pass on to your new car insurance provider.
Simples!
What Happens To My No Claim Bonus if I've Been Away From Driving?
If you've only taken a short break from driving, then your no claims bonus should remain intact.
However, if you've had a break from driving that lasts longer than 2 years, your no claims bonus will be lost.
Is It Possible to Use My No Claim Bonus On a Company Car?
As long as your company car is listed as being used for 'business and personal use', your insurer will likely accept the transfer of your no claims bonus.
What Is Protected No Claims Bonus for Car Insurance?
This is when you pay a fee to protect your no claims bonus in the event of a claim.
No claims bonuses have acquired something of a 'sacred' status over the years, and given how much money they can save you over your next insurance period, it's no surprise that most drivers want to hold onto them.
The cost to protect your no claims bonus usually comes in at around 5-10% of your policy price, which can be a fair chunk.
As for how many claims you're allowed to make, you'll usually be able to make 2 claims across a 3-5 year period without losing your no claims discount.
Is It Worth Protecting My No-Claims Bonus?
If you're a new driver and haven't even been on the road for a year, maybe not.
But if you're more experienced and have a long no claims history, then protecting it can prove verryyy useful.
Because imagine you've driven perfectly for 4+ years.
No accidents. Nothing.
And then BANG! Some nutter steals your car . . .
Absolutely not your fault, of course. Yet if you haven't paid to protect your no claims bonus, you will lose the bonus if the theft isn't resolved. That's because your insurer may be forced to recoup the costs from your policy, obviously affecting your no claims bonus.
What Happens to My No Claim Bonus if the Accident Wasn't My Fault?
It depends.
If you have proof it was the other driver's fault and/or they admit to it, then their insurer will usually pay for the damages and your no claims bonus won't be affected.
However, in other cases your no claims bonus could be affected.
Suppose you're hit by an uninsured driver. Because they don't have any insurance, the claim will have to be made through your insurer (sucks, we know), and if you haven't paid to 'protect' your bonus, then you may lose it.
Again, that's where paying to 'protect' your no claims bonus can come in handy.
Summary
No claims bonuses . . . another incentive to drive safely and save on your premiums.
There's obviously other ways to lower your insurance costs, like getting a black box or a cheap/reliable car, but a no claims bonus is right up there.
FAQs
How does a no claims bonus work?
A no claims bonus is a discount that gets you money off your car insurance costs. You get it when you drive for 12 months without making a claim on your insurance, and the discount gets larger for every year after that, as long as you still don't make any claims.
Is it worth paying for no claims bonus?
You can pay to 'protect' your no claims bonus in the event of having to make a claim, so that you'll still get the discount on your next policy. It makes most sense when you've built up a strong discount over the years and don't want to risk losing it.