Your Car Insurance No Claims Discount
Information about the UK car insurance no claim bonus issued by insurance companies
The UK car insurance no claim bonus and no claims discount are two terms meaning the same thing. Accumulating a no claims discount can significantly reduce the cost of your car insurance cover. If you want to understand more about no claims discount and how it works please read on.
Car insurance, and in particular the cost of individual premiums, is an assessment of risk. The lower the risk you represent to the car insurance company, which has to pay out in financial compensation if you suffer an insured loss, the lower the premiums they will charge. This is because you are potentially a customer who will be less costly than one who is more likely to make a claim.
The car insurance company will use any historical information they can gather about you to calculate an applicable premium. They have have acess to a vast range of sophisticated statistics regarding factors associated with car drivers and whether these factors, both singularly and in combination, make you a person who is more likely to make a car insurance claim, this in turn affects the premium you will be asked to pay.
These factors cover a large range of items including: your UK address and where the car is kept over night (because some areas have higher car crime rates than others and your car has higher chance of being stolen or damaged); your age (whilst young drivers can be considered as more reckless, senior aged drivers can exhibit slower reaction times and declining eyesight); the type of car you drive; being a smoker. These factors together with many more can have a complex relationship when it comes to calculating your insurance premium.
The no claims discount is a more basic consideration than this. It really is simple, if you haven’t made a claim before or you have driven a long time without a claim, the car insurance company will see you as someone who is less likely to claim in the future than someone who has. You will be rewarded for not claiming and being a person who is increasingly less likely to claim, with a reduction in the cost of your car insurance cover, hence the phrase ‘no claims bonus’ or 'no claim discount'. Your discount is represented as a percentage of the calculated premium and can be built up year by year and you will be rewarded for each year without a claim having been made.
Each car insurance company will have its own calculation for the exact discount on premium or ‘bonus’ that can be provided. There is, however, a fairly typical no claim bonus schedule that gives an indication of the amount of discount you could expect to receive. The maximum number of years discount can also vary but averages out at five. The total bonus can be as much as a 65% reduction in premium for non-claiming customers which can be accumulated as shown in the following guide, a 30% bonus after the first year, 40% after the second, 50% after the third, 60% after the forth and 65% following five years without a claim on your insurance.
Additionally it is possible to 'insure' your no claims discount. You can do this with most UK car insurance companies and it works by adding no claims bonus protection to your insurance policy once you have achieved the maximum no claim discount. This allows you to make one claim (or more dependant upon the car insurance company) within a given period (two to five years) without losing your valuable 65% no claim discount. You can now appreciate how the no claims discount works for car insurance and see how much money you could save if you remain claim free.
For more details on your current car insurance company's particular no claims discount scheme contact them for more information.