card guide
No Claims Discount - What Is It?

A No Claims Bonus is basically the same as a No Claims Discount, but technically one results in the other. Either way, they make a heck of a difference to how much your car insurance costs.

Guard it with your life

A full No Claims Discount can be as much as 60% off your premium, so if you have one already it’s worth hanging on to it. If you haven’t, then it will take about five or six years to build it up to the maximum level.

Different insurance companies offer different levels of No Claims Bonuses, at different rates, but they all behave roughly the same way.

The Association of British Insurers specifies the following as typical of the rates of No Claims Discount:

1 year: 30%
2 consecutive years: 40%
3 consecutive years: 50%
4 or more consecutive years: 60%

So as the years go by and you haven’t made a claim the insurance company adds a greater and greater discount for each year. It peaks at around the five or six year level and this is known as having a full No Claims Bonus or Discount.

If you have a minor scrape which will cost just a little more than your excess to repair it, always pay for it yourself, rather than make a claim and lose the benefits of your No Claims Discount.

Increasingly Insurance companies offer to safeguard the No Claims Discount, at a price of course.

What cover?

Sometimes it can be insured for the length of your policy irrespective of the number of times you claim and sometimes it is restricted to two or three claims within a certain period of time. Either way, you should always check so that you know before you sign up for the policy.

What is a claim?

A claim is identified by most insurers as a payment made by them either to the policy holder or to a third party.

If you haven’t safeguarded your NCD and you have an accident that you then make a claim on it will usually set back your NCD by a couple of years. Given that in the first year the No Claims Discount can be around 15% and climbs to 60% with some insurers after six years, it can be a hefty wedge to have to pay out the next time you renew your insurance. For instance, if you have three years No Claims Bonus running at 40%, then you will be knocked back to 1 years No Claims Bonus with only the original 15% discount in place.

Usually the option to protect your NCD can only be taken out once you have reached the full amount and as we said, this will vary from between five and six years, depending on the insurer.

Company Car

What do you do about gathering a NCD if you are provided with a company car which means you are covered by the group insurance policy? Well, often you can get documentation from your employer that will prove you have driven safely for however many years, so your insurers will add in those years as part of your No Claims Discount.

You can’t take it with you… or can you?

When you transfer your insurance policy from one insurance company to another the new insurer will always require proof of your existing No Claims Discount. Usually the expiring insurance policy documents are sufficient to satisfy them.

In the old days you couldn’t take your NCD with you if you changed insures, but it is a sign of the modern competitive market that all insurers will accept your NCD from another insurer as long as they have the proof.

Posted on: [ November 03, 2017 ]       Add to   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon