No Claims Bonus Guide

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By Katie Thompson

on Friday 28 June 2019

Car accident

When you’re looking into your car insurance policy, you’ll want to consider many factors.

As premiums go up, there are ways that motorists can make them cheaper. One of these is a no claims discount, or bonus.

What is a no claims bonus?

A no claims bonus is awarded to motorists who have a successful track record of driving, not necessarily always without accident, but without insurance claims.

This works better for insurers, who ultimately have to pay out less in repairs, and also results in reduced premiums for motorists.

How does a no claims bonus work?

Insurers will give their customers a set number of years in which they should not make a claim, thereby rewarding them for driving safely.

This is generally five years, though it is ultimately down to the insurer. When motorists have reached this point, insurers will reward them by reducing their yearly premiums, or fees.

How to build up your no claims bonus

You’ll earn one year’s no claims bonus for every year you don’t make a claim, starting from the date you took out your policy.

Some insurance companies may offer an additional bonus such as an accelerated policy. For example, some may offer a one year bonus after a motorist has earned 10 months.

In theory, you can earn an unlimited number of years for your no claims discount. However, most insurance companies will limit the discount after five years.

How do I protect my no claims bonus?

Accidents can happen, and they’re not always your fault. Some motorists may have to make a claim based on damage to their vehicle even if they did not cause the accident. For this reason, some people like to protect their no claims discount.

The most effective way of doing this is to approach your insurer. Many may offer to protect your no claims bonus – all you have to do is pay an additional fee on top of your policy.

This means that if you do have an accident, regardless of whether or not it was your fault, your bonus will be protected.

How long do no claims bonuses last for?

Generally speaking, a no claims bonus lasts around two years. This includes if you don’t have your own policy.

You will have to start your no claims bonus again if you cannot prove you’ve had access to a car within this period.

How long do no claims last if not driving?

In addition to your claim not lasting beyond two years if you don’t have your own policy, it also applies if you’re off the road. This could count if your car is SORN, for example, or if you simply do not have access to a car.

Do no claims expire?

When you go to renew your car insurance, you may want to ask your insurer to provide proof of your no claims bonus.

If you decide to switch insurers, then your existing bonus will only be transferable for two years, after which it will expire.

How is your no claims bonus affected after making a claim?

The outcome of your no claims bonus after making a claim will depend on your insurer. Some insurers may simply reduce the discount if they have to pay out, while others may get rid of it altogether.

Sometimes it depends on the circumstances of the claim itself. For example, if two cars are involved and the insurers cannot come to an agreement on whose fault it is, both drivers’ bonuses may be evenly reduced.

What happens when you change your car?

You can transfer your no claims bonus from one car onto another. However, your bonus may be affected if you change your policy by switching insurer. Also, you will not earn a year’s bonus if you switch cars midway through the year.

No claims bonus on two cars

Your no claims bonus applies to one car only. However, if you do want to transfer it from one car to another, this is fine – just ask your insurer for proof of your discount.

Is it worth having a no claims bonus?

A no claims bonus is a great incentive to encourage safer driving and will certainly save you money. In some cases, you can save up to 30% on your premiums, but if you want to pay to protect them, it costs £23 on average.

For other car insurance related tips, including how to reduce your car running costs, take a look at our related articles and check out our Facebook page for the latest news.

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