The no claims bonus can be one of the most controversial areas of your private or motor trade insurance policy. On the face of it, the idea is simple. Car and van drivers who avoid accidents, and thus do not make insurance claims, are rewarded by a lower premium. Even after a one year without a claim significant savings begin to be made, but after this, the benefits can really rack up. It is not surprising that vehicle owners with a long history of claim free driving are very protective of their record.
This incentive encourages road users to drive carefully, proving they are a good risk and reducing their premium. However, an increasing number of insurance companies will allow you to transfer your NCB when you switch insurers.
While the NCB is designed to encourage and reward safer driving, it is, of course, possible to be involved in an accident which is the fault of another party. While in theory the other driver’s insurance should cover the costs, increasing numbers of uninsured drivers on the roads mean that your own insurer can end up paying and you could possibly lose your bonus. You may want to check the terms of your policy because some insurers give you the benefit and peace of mind of being insured against incidents involving uninsured drivers.
You may be given the option to protect your no claims bonus. In this case, the insurance premium will go up slightly, but in the event of a claim, your carefully maintained bonus discount won’t be lost.
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This may sound like a great idea, but there are disadvantages. If you never make a claim, you could be paying that little bit extra on your insurance premium without reaping the benefits. If you look more closely at the terms for your no claims, you may find that there is a limit on the number of accidents you can have within a certain period of time, and still retain the bonus. You might feel, however, that having the extra reassurance is worth the cost. After all, very few of us are confident that we will never be involved in an accident.
Many drivers, after a small incident in which nobody is injured and only minor damage is done, choose to settle the claim privately, rather than involve the insurance companies. This can seem like a quick and simple solution, but remember that you will have no recourse if it turns out that the damage is more extensive than you first thought. Since it can be difficult to think objectively after the shock of a road accident, it is probably safer to leave matters in the hands of your insurer.