What is a “no claims” discount?
We all hear the term “no claims discount” many a time when looking at renewing or taking out car insurance. But do you actually know what it means for you as a car driver?
In simple terms, a no claims discount refers to the number of years a driver has gone without an insurance claim on their car insurance policy.
Often you will be offered various discounts on your policy costs based on the number of years you have accrued without claiming. The amount of discount depends on who your insurer is, and how many years of no claims you have.
According to Confused.com, a no claim period of fiver or more years can save you up to 75% of your annual premium – so if you haven’t made a claim in recent years its well worth investigating further.
Also, if you take your Pass Plus test at any stage after your driving test, you could gain another year’s worth of no claims discount. Equally, check out how long your insurer classes as a year. Strangely some insurers run a 10 month rather than 12 month year – so you could have more ‘years’ no claim discount than you first thought!
You can accumulate an unlimited number of years no claims but as a general rule, most insurance companies will only take a maximum of five years no claims into consideration when calculating your discount.
What happens if I make a claim?
If you need to make a claim on your car insurance policy that results in them paying out, the chances are that you will lose all or part of your no claims.
However, if you’re hit by someone else and it is confirmed that the accident wasn’t your fault, your insurer may be able to recoup the money from the other party. In that instance, your no claims wont be affected and the discount you receive shouldn’t be affected. If it is unsure whose fault the accident is, the insurance companies may decide to split the cost, and both parties’ no claims discounts are likely to be affected.
Can my no claims discount be transferred?
Yes, in most cases you can transfer your no claims discount to a new car with no problem. After all, it is you as a good driver who is accumulating the good record – not your car!! However, its worth double checking with your insurance company first before purchasing your new car.
If you want to change insurance companies and take your no claims discount with you, don’t cancel your existing policy. Instead, you need to wait until your current policy has run out before taking out a new policy with a different company. In this case, the old insurance policy should provide proof of your no claims history which you can pass to your new insurer for your discount to be carried over.
What does protected no claims mean?
Lots of insurance companies now offer you the option to protect your no claims discount. This means that you are able to have two accidents during your policy which can be your fault, yet still not lose your no claims discount. However, although your discount may be protected, your premium may still go up after an accident. So although it may be cheaper than if you hadn’t protected your no claims – your policy may still be higher than the previous year.