Everything You Need to Know About a No Claims Bonus
If you’ve read our blog post about how insurance is calculated then you will have learnt that a No Claims Bonus is a factor that is considered when insurers calculate your quote. Learn everything you need to know about a no claims bonus, including what it is and how you can build it, here.
What is a No Claims Bonus?
A No Claims Bonus (NCB) counts the number of years you’ve gone without making a claim on your car insurance policy. For every year that you don’t make a claim, you’ll gain a discount on the following year’s premium.
Whilst a NCB varies depending on whom you are insured with, generally, if you have a NCB of five years or more, you’ll receive a hefty discount on your premium.
How Can You Build it?
You’ll earn a year’s NCB for each year you go without making a claim. So, the trick is: try not to have a car accident! However this is easier said than done, especially as there are lots of other drivers on the road. It’s worth reading our blog here, to find out what to do in case you are involved in an accident.
Some insurers offer accelerated policies where you can earn a bonus in a shorter amount of time than the standard year, so it’s worth checking this out. Whilst you can build up many years, a lot of insurers will only take into consideration a maximum of five years when working out a discount.
How is Your NCB Affected?
If you make a claim on your insurance policy and your insurer has to pay out, you’ll lose some, if not all, of your NCB.
However, if a car hits you and it’s agreed that you weren’t at fault, your NCB may not be affected. How? Your insurer may be able to reclaim the pay-out from the other driver’s insurer. If fault can’t be agreed on, the cost of the claims may be split and both drivers’ NCB could be affected.
Protected No Claims: Yes or No?
It’s well worth protecting your NCB. Why? Well, if you have two accidents and happen to be at fault both times, your NCB won’t be affected. Protecting your NCB allows you to have this opportunity to keep your NCB intact, even if your insurer can’t claim their costs back.
Unfortunately though, protecting your NCB won’t stop your premiums from increasing after a claim. Insurers use your claims history to evaluate premiums and your NCB discount is calculated at the end. The NCB you have remaining after the claim may lower your new premium, but it may not be lower than the previous year.
Typically, it costs an extra 5-10% of the total premium for protected no claims and whilst this may seem extravagant, it can cost as much as £100 a year if you’ve had a recent claim where you’re at fault.
What Happens if You Change Your Car or Policy?
You can usually transfer your NCB to another car, however if you change insurers before the year is up then you’ll lose the NCB for that particular year.
At the end of your policy, you should receive proof of your NCB which can then be passed on to your new insurance provider. If you haven't been sent proof of your NCB then you should give your insurer a call and make a request for it to be sent to you.
If you cancel your policy completely, you’ll have two years to reuse your NCB before it expires. After this, you’ll have to start over and accrue a new NCB.
So, now you’re clued up on a No Claims Bonus, we’re sure you’re feeling full of wisdom. Watch this space to learn more; later this week we’ll be covering a HPI Check. If you’re wondering what this is, then stay tuned!