Understanding Car Insurance No Claims Discount and Bonus

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Car insurance No Claims Discount and Bonus –

You may have heard of or been familiar with the terms “No Claims Discount” or “No Claims Bonus”, but you might not know what they mean if you’re a new driver or a young driver. These discounts are not available in the first year of your car insurance policy. It is unlikely, however, that you were not informed about them when you first took out car insurance. These terms basically mean that you will get a discount on your next year’s car insurance premium for each year of no claims. The discount refers to the percentage of your car insurance premium that you will receive. The Bonus concept is the number of years in which there have been no claims. These terms can be interchanged, as NCD and NCB are often used in car insurance policy key facts documents.

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The discount amount will vary from one company to the next. It is typically higher in the first few year, sometimes even 30 percent, and then decreases in each subsequent year, usually five to six years. After five to six years of continuous driving without making a claim, you will be deemed to have earned the ‘Maximum no claims bonus’. Every Car Insurance Company has a limit on how long you can build up to your maximum no-claim period. It will usually discount the premium for someone with maximum no claims. However, it can sometimes be as high as sixty percent. Some specialised insurers can offer discounts up to seventy percent. This is because they have better information about the market and can adjust their rates accordingly.

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Protect your good driving record

You will be able to protect your car insurance no claims bonus that you have saved by purchasing Maximum NCD protection if you are able to go through at least five to six years without making a claim. You can get protection for your Bonus years by paying a small premium. This means that if you have to make a claim in an accident, your premiums won’t increase. It is worth considering whether you should purchase this extra coverage. Even if there is a non-fault accident in the sixth year of your driving record, if that causes you to file a claim due the high cost of repairs to your vehicle, your car insurance premiums for the next year will increase by at least 30%. Some Car Insurance companies can offer even more. Maximum No Claims Protection is a new feature that has been introduced in the past twenty years. It is not only a choice for Car Insurers but also a necessity to tie current customers into another policy year, when their policy is due to be renewed. Although this worked well in the early years, it is now easier to transfer earned years of ‘No Claims’ to another Car Insurance Company, who will then honor your request for protection. If you are renewing your car insurance policy with another insurer, you will be required to submit a renewal offer letter that demonstrates your ‘proof of No Claims Bonus’. If you cancel your policy or change your coverage’mid-term,’ you can request a standard letter from the old company.

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You need to consider the cost of this extra coverage against the possibility of a claim.