Car insurance can be expensive, but it’s sometimes possible to lower your premium, if you can prove that you’re a conscientious driver. One way of doing this is by building up a no claims discount. According to the BIBA (British Insurance Brokers’ Association), a no claims discount could give you as much as 65% off your premium.
When it comes to getting insurance quotes, it’s important to shop around and see what different insurers will offer you. They don’t tend to publish the discount they give for no claims upfront, so, until you apply, you won’t know exactly how much you’ll be charged for your annual policy.
What is a no claims discount?
If you don’t make a claim on your car insurance during a year, you’re given what’s known as a one year’s no claims discount – also referred to as a no claims bonus. Typically, one year’s no claims discount gives you 30% off, and this discount increases as you build up the years.
When you apply for car insurance, insurers look at a number of factors when deciding how much they should charge you for your annual policy. Having a good no claims discount and a good number of claim-free years makes you less likely to claim in the future, so insurers may consider you to be less of a risk.
It’s worth noting that most insurers will only consider UK no claims discounts. Also, if you’ve not had car insurance for over two years, the no claims discount you had built up will be null and void.
Depending on your insurer, your named drivers may or may not be able to build up their own no claims discount from being on your policy.
Should I protect my no claims discount?
You can pay extra to protect your no claims discount. When you apply for car insurance, you’ll be asked how many years no claims bonus you have and if you’ve made a claim.
If you’ve claimed recently, you may still be charged more, even if your no claims discount is protected, but you may not have to pay as much as you would have to without the protection.
You should bear in mind that no claims discount protection will only last for a specific number of claims within a set period of time, depending on your insurer. Usually, after two claims within a three or five year period, protection will fall off and any subsequent claims will result in step-back or in the removal of the no claims discount.
What happens if I make a claim?
If you have an accident or your vehicle got damaged, and it wasn’t your fault, then the other driver’s insurance company will have to pay for the repairs and any injuries sustained. You shouldn’t lose your no claims discount, but they’re likely to lose theirs. Unfortunately, if they’re uninsured, this could mean you will.
If you were at fault, your insurer will cover the repair of the other driver’s car and/or property and for any injuries. If you have comprehensive cover, they’ll repair your car, too. If you only have third party cover, you’ll have to pay for your own repairs.
Regardless of the level of cover you have, if you were at fault in an accident, your no claims discount will step back or be removed, unless protected.
What if I don’t have a no claims discount?
If you’ve recently passed your test or have made a claim in the last year, you won’t be entitled to a no claims discount.
Some insurers will give you the possibility of having a black box fitted. This will report back to the insurer and let them know what kind of driver you are, which could result in you paying less than you’d have to otherwise.