Whether you’re new to driving or have been a motorist for a number of years, you’ll know that car insurance is one of the largest expenses you encounter when taking to the roads. When calculating your premiums, insurance companies take several different factors into consideration, from the age, condition and value of the vehicle you’re insuring, to the address at which the car is registered. Another factor insurance companies consider which can help you save a substantial amount on insurance costs is the customer no claims discount. In this guide, we’ll cover the no claims discount (often referred to as the ‘no claims bonus’) in detail, and learn how you can use it to your advantage.
A no claims discount is essentially a discount on your insurance costs based on how many years you have been driving without making a claim on a previous insurance policy. If the insurer sees that a customer has been driving for several years without a claim being made on the policy, they are statistically less likely to lose money on that customer, and therefore, can offer lower insurance rates.
For each year the customer drives without a claim being made on their car insurance policy, insurers will give them a discount on the price of new policies. By driving sensibly and with due care and attention, drivers can accumulate no claims discounts and make more substantial savings each year.
Simply put, the more years you drive without a claim being made on your policies, the greater discount you will see in insurance premiums.
However, it is worth bearing in mind that the rate of discount offered and the number of years’ worth of accumulative discount offered to customers can vary between insurers; certainly worth having in mind if you have several years with no claims and are looking to switch insurers.
While it would be nice to live in a world without fibbing, insurance companies are among the more sceptical of businesses, so if you’re looking to switch insurers, you’ll want to gather proof of your no claims bonus.
Getting proof of no claims from your previous insurer can sometimes be a little confusing because the process often varies from insurer to insurer. While there are often several avenues you can take with many insurance companies to gather the proof, it’s worth keeping some of the following methods in mind in case your previous insurer proves tricky:
When your current car insurance policy is approaching its renewal date, many car insurance providers will send out a renewal invitation pack or letter, stating the cost of renewing your insurance policy with them for another term, as well as an updated no claims discount figure. This document can be used as proof of no claims to your next insurer.
The area in which you live will also impact the cost of your premiums. If you register your car in an area with higher rates of collisions or car thefts for example, it will cost more to insure the vehicle.
Certain insurers will send out a pack of final documents should the customer choose to cancel or not renew their policy; in some cases, this pack will include your proof of no claims discount. Be sure to check on this when you make the decision to cancel or not renew by calling the insurer or checking their online FAQ section.
After you’ve collected your proof of no claims discount it’s important to follow these strict guidelines when forwarding the details on to your next insurer; failing to do so could leave you uninsured.
It’s not uncommon for there to be a time limit in which you need to send your proof of no claims bonus to your next insurer, often between 7-21 days. Having your proof of no claims ready and waiting once you make the switch will ensure you make the deadline. Missing the deadline could result in your new policy being cancelled, or your premiums increase substantially.
Many insurers require the original copy of your proof of no claims and do not accept photocopies to ensure it is not a fake no claims bonus. In this case, it’s wise to make a photocopy of the original letter for your own records before you send them the original.
Be aware that your new insurer may contact your previous insurer directly to confirm your proof of no claims discount, so be sure that the no claims bonus figure you say you have is accurate.
If you have any time off the road, without your own insurance policy, then your no claims bonus won’t last forever. Your proof of ncb is often only valid for two years. Therefore, after the two years is up, you will have to start from the beginning when you decide to take up driving again.
However, if you are wondering how to keep your no claims bonus without a car, you can protect your discount by paying for ncb protection.
While some car insurance providers offer no claims discounts for up to eight years, the maximum amount you can accrue is generally five years. Contact your specific insurer to find out what your maximum no claims discount is. Remember, if you do claim, you risk losing some or all of your no claims discount.
A protected no claims discount allows you to have a specified number of ‘at fault’ accidents without affecting the bonus. Therefore, if you’re protected and have an accident your bonus remains intact, even if your insurer can’t claim their costs back. The specifics of protected no claims discount varies depending on the insurer, so always check the details of your policy.
No claims bonuses are determined by how many years you have a policy without making a claim. For example, if you have three years without making a claim, you’ll have three years no claims bonus. However, there are some exceptions. For example, windscreen repairs and accidents you can prove weren’t your fault are generally exempt and keep your bonus intact. You can find out for certain what your current no claims discount is by getting in touch with your insurer.