No claims bonus (NCB) is crucial way to help reduce car insurance premiums. It is a discount you recieve for each year for which you do no make a claim on your insurance policy. A NCB of five years or more can entitle drivers to a discount of up to 75% off of the cost of your insurance, but the actual discount can vary betwen companies.
No claims bonus, or no claims discount as it can also be known, is earned for each year that you do not make a claim on your insurance. No claims bonus can be earned regardless of the type of policy, therefore you will recive the bonus if you have either third party, fire and theft or fully comprehansive. No claims bonus is most commonly referred to when dealing with both car and home insurance.
The majority of insurance companies offer up to five years as the maximum amount of no claims bonus you can recieved discount for, although some companies can offer further discount for drivers who have up to ten years no claims bonus.
Depending on the cause of the claim and the resulting costs outlayed by your insurance company, it is possible to lose some or all of your No Claims Bonus. For non-fault claims where your insurer is able to reclaim all of the cost, you should not lose any of your No Claims Bonus.
If you make a fault claim, or your insurance company cannot reclaim all costs, you will lose some of your No Claims Bonus. If you have managed to earn five years No Claims Bonus, typically you will lose two years worth of the bonus taking you back down to three years No Claims Bonus. If you make two claims during the period you are insured for you can lose up to four years, and any further claims can result in you losing all of your discount.
It is also worth noting that although No Claims Bonus does not have an actaul expiry date, if you take a break from driving and do not hold a policy for a year or more, some insurers will not allow you to use your bonus that you have previously earned. If you havn't held a policy for more than 12 months and are about to start driving again, check with the insurer to make sure they will allow you to use your bonus.
For an additonal fee when taking out an insurance policy, you are able to protect your No Claims Bonus. This allows you to make one or two claims per year without losing your No Claims Bonus. The actual amount of claims you can make depends on the policy of the insurance company you are with. Protecting your No Claims Bonus does not automatically prevent your premium from increasing the following year as your insurance company will take yours claims history into account, but it will allow you to continue benefiting from the discount the no claims provides.
This largely depends on the policies of each individual insurance company. In the majority of cases a named driver will not gain any No Claims Bonus, although gradually companies are beginning to credit names drivers with No Claims Bonus. Be careful however, if you swap insurance companies the new one may not recognise the No Claims Bonus so check before taking out any new policies!
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