No Claims Bonus Car Insurance

A No Claims Bonus is a discount given by an insurer to policyholders who do not claim on their policy in a period of car insurance. Typically this starts at around 15% after 1 year and climbs to 60% after 6 or more claim free years.

A claim in this instance is any payment made under the policy whether it is to the insured or a third party. 'Non fault' claims that are covered by the knock for knock agreement do not count as a claim under this scheme. Claims notified but closed without outlay do not affect the no claims bonus.

However, claims that have been paid under the policy and have not yet been recovered from a third party may be taken into account. For example, a comprehensive policyholder claims for damage to his vehicle following an accident caused by a third party. Until the insurers outlay is recovered from the third party or his insurer, this would count as a claim on the policy and would 'step back' the no claims bonus discount.

Each claim free year the no claims bonus increases thereby reducing the car insurance premiums. A single accident would typically 'step back' the no claims bonus by 2 years. For example, a 3 year 40% discount would be reduced to a 1 year 15 % discount. As this considerably affects the level of premium payable, many policyholders opt to 'protect' their no claims bonus for an additional premium once the maximum discount is achieved.

This means that in the event of an accident the claim would be settled but the no claims bonus would be unaffected. The claim would however have to be declared at subsequent renewals and on proposal forms.

No claims bonus car insurance for careful drivers

Many policyholders opt for no claims bonus protection as a cost effective way for the careful drivers to contain their premium following an accident. no claims bonus is earned by an individual, not a vehicle and cannot be transferred to another person. The policyholder who should be the vehicle owner and main driver earns it.

In the event of company car drivers who are covered by a fleet policy, proof of individual no claims can usually be transferred to an individual policy on a privately owned vehicle once the company car is no longer used.

Proof of no car insurance claims bonus is requested when transferring to a new car insurance company. This takes the form of a letter from the holding company confirming the number of claims notified or paid and the number of years no claims bonus achieved.