The way no claims bonuses work in the motor trade, and whether they can be transferred between insurers, is fairly straightforward, with a few caveats. Many insurers will actively allow traders to move no claims bonuses from one policy to another, but it’s always worth checking the small print, and, if you’re in any doubt, ask. Some insurers also allow traders to use bonuses accrued in trade policies on their own private car or van insurance – and vice versa – but again this varies from company to company.
A no claims bonus (NCB) and discount in the motor trade is developed in exactly the same way as with a personal insurance policy: through years of driving without putting in a claim to the insuring company. Starting at a one year discount of 20% for claim-free motoring, the bonus is then built up year by year. Unlike personal policies, however, the maximum bonus that can be accrued is usually 50%, representing 5 years no claims. It is also possible for an individual to build up their no claims on a personal policy and have this mirrored (up to the maximum 5 years) on a motor trading policy.
In order to transfer your trade policy and any accrued NCB to a new insurer, you are usually required to obtain a letter from your existing insurance company confirming that you haven’t made a claim for the relevant period of bonus required. This is generally sufficient to carry across your bonus. One common insurance option is to have a protected bonus (which allows you to make a claim and not lose your entire built up bonus), but you may need to confirm with the new insurer that this can be transferred – if a claim has been made, a new insurer can often choose to reduce your bonus entitlement regardless of its previously-protected status.
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Should you wish to leave the trade or take out private insurance, you can often transfer the discounts and bonuses built up on your trade policy. However, as with the various examples detailed in this article, the key point is to closely read the new policy’s terms and conditions before proceeding with any changes; many insurers will honour trade no claims on a personal plan, but it’s important to confirm that before switching policy.