More than half of British motorists don’t know the difference between a no-claims bonus and a no-claims discount, but we’re here to help. Find out more about submitting your No Claims Bonus here.
Are 'no-claims bonus' and 'no-claims discount' the same thing?
A no-claims bonus is the number of claim-free years that you have held an insurance policy in your own name and can only be used on one vehicle at a time.
A no-claims discount is the amount reduced from your annual premium as a result of building up your no-claims bonus, with the percentage discount varying per insurer.
The size of the discount increases for every year that you have held a policy without making a claim, so the more claim-free years you build up, the more money you can save. It’s a way of recognising and rewarding careful and safe driving.
How do I build up a no-claims bonus?
Your no-claims bonus should grow for each year you’re insured and don’t make a claim, commonly for a maximum of nine years.
Your no-claims bonus is yours and can be used if you change insurance provider, but you will have to provide proof to your new insurer through documentation such as a certificate, letter or email.
Protecting your no-claims bonus when you change provider
A no-claims bonus can be a valuable asset, and insurers understand that customers changing provider don’t want to give it up, so they can be transferred if you decide to go for a different policy.
All you need to do is provide evidence of the bonus you have built up and you can enjoy a reduced rate with your new insurer.
The process is simple:
- When getting your insurance quote, state the number of years you have been claim-free when prompted.
- You will need to provide proof of your no-claims bonus. Generally, you will need to contact your previous provider and ask them to provide a letter or email, but your new insurance provider will be able to tell you exactly what to do when you agree your terms.
- When you’ve sent it to the new provider, they’ll record it on their systems and should only get in touch again if there’s a problem.
It’s important to remember to send over the proof of no-claims bonus, as your new insurer may cancel your policy or ask that you pay a higher premium than you were expecting if it isn’t received.
What happens to NCB if I make a claim?
Unfortunately, making a claim will more than likely mean losing some of your no-claims bonus. If you’re unsure of the impact of your claim, it’s worth checking your insurance policy.
However, it’s also worth noting that if an accident is not your fault, then your no-claims bonus is not affected by making a claim - as long as the insurer can reclaim everything they paid out from those responsible.
Many people choose to add no-claims bonus protection on their policy if they have built up a number of claim-free years. This involves an increased premium, but it means usually that you’ll keep your no-claims bonus even if you do need to make a claim.
No-claims bonus protection allows you to make one or more claims before your number of no-claims bonus years falls, but keep in mind that it does not protect the overall price of your insurance policy. Your cover may increase following an accident, even if you were not at fault. This means discounts may reduce or be lost because you no longer have a clean claims history.
Will a chipped windscreen affect my no-claims bonus?
Generally, a windscreen chip repair does not impact on your no-claims bonus.
This, however, will depend on the extent of the damage, which company you use to carry out the repair, and the terms of your policy. For that reason, it’s always worth checking your paperwork.
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