Understanding No Claims Bonus
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 exactly is an NCB, how does it work, and how can you protect it?
What Is a No Claims Bonus?
A No Claims Bonus is a discount that insurers offer drivers who don’t make any claims on their car insurance for a set period, typically a year. If you avoid making a claim, you earn a discount on your next premium. The longer you go without a claim, the bigger your discount. In some cases, after five years or more of claim-free driving, you might receive a substantial reduction on your premium.
How does a No Claims Bonus work?
- Year 1: If you don’t make any claims in the first policy year, you 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 offered by your insurer.
- Claims impact: A claim can reduce or reset your NCB, depending on the insurer. Some insurers might lower your NCB from five years to three, while others could reset it entirely.
- Transferability: NCBs are often transferable between insurers, though the new company might have different rules for calculating the discount.
Protecting your No Claims Bonus
One claim can lead to losing part or all of your NCB, in turn raising your premiums. To prevent this, many insurers offer No Claims Bonus Protection, enabling you to safeguard your discount:
This is an optional add-on to your policy that allows you to make a limited number of claims over a set period (often one or two claims in three to five years) without losing your NCB. While it won’t stop premiums from rising after a claim, it ensures that your discount remains intact.
Adding NCB protection increases your premium slightly but can be worthwhile if you have several years of NCB. The potential savings from keeping your NCB intact often outweigh the extra cost.
It’s worth noting that different insurers have different rules. Some policies allow multiple claims without impacting your NCB, while others may be more restrictive. It's essential to read the fine print to understand the coverage limits.
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 happen, and that’s where NCB protection can be a game-changer, giving you peace of mind, knowing that even if the unexpected occurs, your carefully accumulated discounts remain intact.
Our business is your protection
At NLIG, we want to ensure you have the right level of motor insurance for your needs and are happy to explain further about your No Claims Bonus, 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@nlig.co.uk