The no-claims discount you get on your car insurance is a reward for safe driving – and can cut the cost of your car insurance by as much as 75% with most insurers. So it’s good to know that you can take your discount with you when you switch insurers.
Here’s how it works. Most insurers offer a premium discount for every year without a claim, usually up to a maximum of five years. For example, you might earn a 30% discount on next year’s premium, if you do not make a claim in the previous year. Drivers who can boast five consecutive claim-free years can expect a discount of as much as 75% - or even more in some cases. The size of the discount, sometimes called a bonus, varies from insurer to insurer. Companies also calculate the discount in different ways. A number of firms even allow the discount to build up over 10 years or offer an ‘accelerated’ discount or bonus, where the discount applies after 10 months instead of 12.
Making a claim
It’s worth finding out what would happen to your discount if you put in a claim as you won’t necessarily forfeit the full amount. For example, if you have built up a discount over five years and make a claim in year six, you might lose only two years of discount. So, when you come to renew your car insurance, you would benefit from a three-year bonus. Remember that your insurance premium can still go up at renewal even if you don’t make any claims. That’s because the driver’s claims history is only one element in the premium calculation. Insurers also take into account factors such as your address and mileage, when they quote for cover. That’s why it’s always important to shop around when you renew, to make sure you’re getting the most competitive price for the cover you want.The no claims discount can clearly be valuable, which is why many motorists pay to protect their bonus. This means paying an additional amount of premium so that you can make one or two claims in a year without losing the discount.