How does a no claims bonus work?

In this video MoneySupermarket’s motor insurance expert, Steve Sweeney, explains what No Claims Bonuses are, how to protect them and the difference they can make to the cost of your car insurance premium...

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Steve Sweeney: A no claims bonus is the reward a car insurance firm will give to a motorist to reward them for claims-free driving.

This bonus increases for each year without a claim. If you go five or more years without making a claim you can bag a discount of up to 75% off the cost of your car insurance.

You can carry your no claims discount from one insurer to the next. So for example, if you had five years no claims discount, you can take 5 years no claims to the next insurer – provided you don’t have a claim, then you will always have that 5 years no claim, which should give you a discount from your next insurer.

But if you do make a claim on your car insurance, then you could lose some or all your no claims bonus.

To safeguard against this, you can pay extra to protect your no claims bonus. With this protection in place, you could make one, or potentially more, claims against your car insurance without actually having any reduction in your no claims bonus. If you do make a claim, even though the bonus is protected, insurers will still take that claim into consideration when looking at your next year renewal premium.

So even if you do have the maximum no claims bonus, it’s always worth shopping around – another insurer might just want your business more than your current insurer.

The best way to keep your car insurance no claims bonus intact is really simple - just drive safely.


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