No Claims Bonus
A no claims bonus is where a driver receives a discount on their premium based on amount of years they’ve held an insurance policy without making a claim. The higher the number of years you’ve had without the accident, the higher the discount you’ll receive. Only the person who has taken out a policy in their name can earn a no claims bonus.
Usually, the max number of years that you can receive a no claims bonus for is 6 years. Your no claims bonus does not increase any further after six years as this is the maximum discount. Therefore, whether you have 8 or 15 years of no claims, the bonus that you receive will be the same. You can receive a reduction of up to 67% on your policy by having a full no claims bonus.
If someone makes a claim against you, you will lost your bonus. If you’re involved in an accident where you are not at fault, you insurance company may pay out the fees until the case is settled. Once it’s established that you are not at fault, your bonus will remain the same without being reduced.
But what happens if you are in an accident that is your fault? Normally your bonus is reduced which might result in you paying higher premiums on your insurance. However, nowadays most insurers provide the option of protecting your bonus.
Full No Claims Bonus Protection
You will usually have the option to protect your no claims bonus when you’re taking out your insurance policy. By paying an additional fee on your policy, you can protect your bonus, even if you make a claim. This means that you will still receive the same discount despite making a claim. It’s important to read your insurance company’s terms and conditions when taking up no claim protection, as some insurance companies apply limitations. These may include, restricting the amount of times you can make a claim before your no claims is affected. It is also worth noting, that despite having a no claims protection in place, some insurance policies will still take the number of accidents you have been in into account.
Step Back No Claims Bonus Protection
Step back no protection is where a policy holder protects part of their bonus. For example, where you’re at fault in an accident, instead of losing your full five year bonus, you only lose two years and ‘step back’ to having three years no claims bonus.
Can You Keep Your Bonus If You Are Off the Road for a while?
If you’re going travelling or taking a break from driving, you may lose your bonus if you are off the road for two years or more. Give your insurer a call to find out how much time they allow before rejecting an old no claims bonus.
If you’re thinking of purchasing a new car insurance policy, contact KennCo Insurance today for a secure quote.