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How your no claims bonus actually works

By: Mark Bartley

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A no claims bonus is largely straightforward, and so is how it works to some extent. However, how you choose to apply the rules on a no claims bonus can vary, depending on whether claiming after a minor accident is financially in your best interest. For instance, if you had three years accident-free motoring where you have made no claims at all on your insurance, a small repair might not be worth claiming for if your no claims discount is taken into account. Many careful drivers rely on their no claims bonus for a hefty discount on their car insurance policy and therefore may choose to foot the bill themselves.

A no claims bonus is also something drivers can be quite proud of, as it is a reflection of their attention to careful and safe driving. But essentially a no claims bonus is the way that insurers can encourage you to drive safely, and therefore reduce the risk of cost to themselves in payments, and reward you with a proportion of these savings.

For most of us, the amount of no claims bonus we have accumulated over the years will be one of the major factors that affects the cost of your insurance. Being classed as 'low risk' by the insurance companies is crucial when it comes to getting the best deals on a range of covers for you and your vehicle. How much you can save by driving sensibly and not making any claims on your insurance can vary across different insurance companies, so you should not assume you will always get the best deal with the same broker. Shopping around is still recommended in order to get the best deals when you take no claims bonus into account.

Changing insurance provider
If you find after comparing prices on car insurance that you can get a better deal with another insurance broker, you should ensure that they will accept your no claims history to qualify for a discount. Proof of your claim-free history is essential to be able to enable the insurance provider to give you a cheaper price for the cover you need. Most of the time you'll just need a letter or renewal notice from your previous insurer confirming the no claims history and number of years that apply. Always keep all the documents that refer to your no claims status. You never know when you might want to change insurance companies, especially when it's easy to compare prices online.

Protect your no-claims
Consider the possibility that you could accumulate a valuable discount after years of careful driving and continuous accident free years for a significant no claims bonus, but then need to make a claim. Losing your no claims bonus would mean losing all or at least a significant amount of the discount on your car insurance. There is a way to protect your no claims bonus and still make a one-off claim.

Sometimes for a small fee, an insurer can allow you to make one or two claims under your cover policy without losing that no claims bonus you've spent years adding up. This added protection means that excellent driving need not be clouded by one claim, and importantly for your finances, you can continue to enjoy the rewards of your no claims bonus.

Article Source: http://depositarticles.com/

This reviewby Mark Bartley is one of a series about car insurance. Mark's information should help anyone when they next come to insure their vehicle

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