No Claims Bonus

Information about your car insurance no claims discount:

A no claims bonus can significantly reduce the cost of your car insurance cover. If you have never heard of the no claims bonus, or are unsure as to its workings or methodology it can be explained as follows:

Insurance works upon risk. The less risk the company has to pay out in financial compensation the less premiums they will charge as potentially you will be a customer who is less costly than one who will claim. Any historical information that the car insurance company can use in calculating a premium they will. They have a whole host of statistics or which ‘type’ of person is more likely to claim, these factors in turn affecting the premium.

These range from being a smoker, to your UK living location (some areas have higher crime than others and your car has more chance of being stolen) , to your age (young drivers can be seen as more reckless, much older drivers can have declining eyesight and reaction times). The no claims bonus is rather more basic than this. Quite simply if you haven’t claimed before, you are seen as more unlikely to in the future than someone who has. The reward for not claiming is a reduction in the cost of cover, thus the phrase ‘no claims bonus’. This can be built up year upon year and the customer can be rewarded for each without claim.

There are many different insurers, each of which may calculate the exact discount on premium or ‘bonus’ that can be provided. However typical no claims bonus schemes range from zero years to a maximum of four to six. The total bonus can be as much as a sixty five reduction in premium for non-claiming customers – a thirty percent bonus for the first year, forty percent for the second, fifty percent for the third, sixty percent for the forth and sixty five for the fifth and final year of bonus.

So you can now see how the no claims bonus works for car insurance and exactly how much money you could save. The difference in premiums can be vast. For example Bob made a claim last year, so this years premium he has quoted five hundred pounds. However with the maximum bonus of sixty five percent he would be paying just one hundred and seventy five pounds.

For more details on your companies’ particular scheme contact them for more information.

Tags: older drivers, risk, no claims bonus, maximum bonus, no claims discount, insurance policy, young drivers, car insurance