Understanding No Claims Bonus
We know saving money on car insurance is a priority for many, and the No Claims Bonus (NCB), or No Claims Discount, is one of the most effective ways to reduce premiums. But what is an NCB, how does it work, and how can you protect yours?
A No Claims Bonus is a discount that insurers offer drivers, who don’t make any claims on their car insurance within a minimum of a policy year. If you avoid making a claim, you earn a discount on your next premium. Each consecutive year without a claim, the greater your discount becomes. In some cases, after five years or more of claim-free driving, you might receive a substantial reduction on your premium - this can differ depending on your circumstances.
How does a No Claims Bonus work?
- Year 1: If no claims are made within the first year, you will earn your first year of NCB, leading to a small discount at renewal.
- Subsequent years: The discount increases with each claim-free year. After five years, you might reach the maximum discount your insurer offers.
- Claims impact: Depending on the insurer, a claim can reduce or reset your NCB. Some insurers might lower your NCB from five years to three, while others could reset it entirely.
- Transferability: Policies are often transferable between insurers, although the new company may have different rules for calculating discounts.
Protecting your No Claims Bonus
Making a claim on your insurance can result in losing part or all of your No Claims Bonus (NCB), which can lead to higher premiums. To avoid this, many insurers offer No Claims Bonus Protection, allowing you to safeguard your accrued discount.
NCB protection is an optional add-on to your policy that enables you to make a limited number of claims over a specified period—typically one or two claims within three to five years—without affecting your NCB. While it may not prevent your premiums from increasing after a claim, it ensures that your discount remains intact.
Adding NCB protection will slightly increase your premium, but it can be a worthwhile investment if you have accumulated several years of NCB. The potential savings from maintaining your NCB often outweigh the additional cost.
It's important to note that different insurers have varying rules regarding NCB protection. Some policies may allow multiple claims without impacting your NCB, while others may have stricter limits. Be sure to read the fine print to understand the specifics of your coverage.
A No Claims Bonus is a valuable asset that rewards careful driving and provides a significant financial incentive for maintaining a claim-free record. However, accidents can happen, and that's where NCB protection can make a difference, offering you peace of mind knowing that your hard-earned discounts will remain intact even if an unexpected event occurs.
TMD – Our business is your protection
At TMD, we want to ensure you have the right level of motor insurance for your needs. We are happy to explain further about your No Claims Bonus, and whether you are eligible for No Claims Bonus protection, and how your insurer operates this important benefit.
For assistance with any aspect of your motor insurance, whether a quotation, renewal or making changes to your policy, please call us on 01992 703 000 or email insurance@mcdonaghs.co.uk