Many factors can impact the total cost of your car insurance, though a no-claims bonus can take a significant chunk off the cost of your premium.
To put things into perspective, there were 38.9 million licensed vehicles in Great Britain in 2019 – that’s up by 1.3% compared to 2018, where over £7million was paid out in claims during that year alone. With more cars on the road (and the potential for more accidents and claims), it’s now more important than ever to understand the benefits of your no-claims bonus and how to go about protecting it.
How a no-claims bonus affects your insurance
A no-claims bonus is a count of the number of years you haven’t made a claim on your insurance. It’s offered by car insurers to reward their members for being safe and cautious drivers, and for not making a claim. Because your no-claims bonus increases on a year-by-year basis, the longer you can go without making a claim, the more you could reduce your insurance premiums.
For example, after one year your no claims bonus could reduce your premium by 30% and increasing to as much as 65% or even 70% for five years. However, the amount in total will depend on who you’re insured with, and your no-claims will still be intact even if you switch providers.
What can you claim for on a policy?
A car insurance policy is designed to pay out in the event that any persons or vehicles are injured or damaged in an accident. Depending on what type of car insurance you have (e.g. comprehensive, 3rd party or 3rd party fire and theft), you can claim the following on your policy:
- Personal injury for any person involved, including yourself
- Damage to your vehicle
- Loss of your vehicle (if it has to be written off)
- If your vehicle is stolen
Losing your no-claims bonus
If you don’t protect your no-claims bonus and you are involved in an accident, then you will lose all or some of it, whether it was your fault or not.
If you do have an accident and make a claim, then you would lose some or all your bonus. If someone else hits your car and it’s agreed you aren’t at fault, the pay-out could come from the other car’s insurer and therefore your bonus wouldn’t be affected. If nobody can agree which driver was at fault, then both premiums and no-claims bonuses can be affected.
How to protect it
It doesn’t seem fair that you can your no-claims bonus can be negatively affected by non-fault claims as well as fault ones, but you can protect yours by paying a fee on top of your car insurance. While you will be locking in that discount even if you have an accident, many insurers impose a limit to the number of times you can make a claim within a year without affecting your bonus.
If you’re looking for a new insurer and want to protect your no-claims bonus, check to see if they state the number of times you can do this.
Finding the best policy
While car insurance comparison sites are useful, bear in mind that these companies can be promoted, so you won’t necessarily be shown the best policy for your needs.
However, if you want a great deal that protects your no-claims, contact an independent insurance advisor, such as Online Money Advisor. They’ll be able to find unique deals by tailoring to your preferences, plus they have access to offers that aren’t available to the general public.