Be rewarded for safe driving with the possibility of cheaper car insurance. Sounds good, doesn't it? Well, that's exactly what a no claims discount is – and in this handy guide, we've answered all those burning questions you may have about this insurance benefit.
A no claims discount is a type of benefit drivers receive if they prove to insurers they have a track record of safe and responsible driving. It's something all drivers can take advantage of, so long as you have more than one year of continuous driving and haven't had to make a claim.
For every year you have car insurance and don't make a claim, your premium will be discounted when you come to renew. The more years you have, the greater the discount, which can amount to cost savings over time. In fact, people with five years no claims could pay up to 60% less for cover.
Many drivers wonder what's the maximum no claims discount they can build up. Well, you can actually have an unlimited number of years of no claims, but most insurers only offer discounts for the first five.
Provided you always have car insurance, your no claims discount will last up until you make a claim. However, if you don't insure your car for one or two years, you could lose all the discount you've accrued.
The so-called grace period varies between insurance providers. Most accept a no claims bonus from drivers who haven't been insured for up to two years, but the time period can be as long as three years or as short as 12 months. That's why it's always important to read the small print.
If you make a claim, it's likely you'll lose all or some of your no claims discount. Usually, insurers will deduct two years' worth of discount if you claim following an accident.
However, if you're an involved in an accident that's not your fault, and your insurer reclaims costs from the other driver's insurance provider, you might not lose your bonus.
The good thing is your no claims discount can be transferred between insurance providers, but your new insurer will ask for proof. This can be your renewal notice as these usually have your NCD or some insurers will ask for a certificate which you can get from your previous insurer.
No claims discount protection means you'll lock in any discount you've built up over the years. Protected no claims discount can be taken out as an extra with your policy and will ensure your bonus stays intact even if you're involved in an accident and claim and the costs can't be recovered. Bear in mind you usually can't make more than two claims across a three-year period and still have a protected no claims bonus.
A no claims bonus tends to apply to just a single car – it can be transferred from car to car, but not applied to an additional one. If you drive a company car, you should be able to build up a bonus provided you're the named driver on the company's policy.
If you take out car insurance with Hastings Direct, we also offer the option to protect any no claims discount you build up before taking out car insurance with us as soon as you have three years or more NCD.
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