No Claims Bonus

Depending on your claims history you are generally awarded a percentage discount for each year that you do not make a claim on your car insurance. You begin your insurance life with 0 years and 0% no claims and gradually build up from there to a maximum of 60%, or 4 years no claims. In some cases an insurer will allow you to reach a maximum of 65%, but this is generally an incentive and whether you have 60 or 65% you will still be in a much better position to receive cheaper car insurance.

After your first claim free year of driving you will be awarded a 30% no claims discount. The following years will see you build through 40, 50 and 60%, but only if you maintain your claims free record with the insurer. If at any time you make a claim on your policy your insurance will step back two places. For example, imagine you had built a 40% no claims bonus then make a claim on your insurance, this will effectively knock your discount back to 0% again.

However, building a no claims bonus is probably the easiest way of cutting insurance costs, so the sooner you start the easier insuring a car will be on your pocket. Some insurers will actually offer you introductory offers to capture your business, and. these are quite often stepping stones to acquiring a full no claims bonus. You might find an introductory offer of one years no claims for 10 months worth of insurance, or perhaps one or two years for keeping your annual mileage below a certain level. They all help, though, and speed you on your way to the magic full no claims.

Protected No Claims Bonus

Since a no claims bonus is such an asset to have most insurance companies will offer clients protection against losing it. However, this comes at a cost and will generally mean you pay a little extra on your insurance premium. Even though the general idea is not to make any claims on your policy a protected no claims bonus normally has a certain amount of flexibility to it. You will often find you are allowed to make up to two insurance claims in any three year period without it affecting your bonus in any way. And for the small outlay it costs to protect your no claims bonus it has to be well worth every penny, for it has the potential to save you hundreds of pounds over your driving career.

Guaranteed No Claims Bonus

For an extra safeguard many insurance companies will offer a guaranteed no claims bonus. This protects your bonus despite the number of claims you make on your insurance policy throughout the year. The additional cost for this, though, is usually 15/20% of your premium, but if you already have a 60% no claims bonus then this will still amount to large savings on your car insurance.

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Other articles relevant to this are: Choosing a Policy
and Reducing Your Premium
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