Can I get no claims bonus protection?
Published 2 October 2016 by Emily Bancroft
What does no claims bonus protection mean for your car insurance?
It’s well-known that safer drivers generally save more on their car insurance. This is because they can benefit from a no claims bonus. If you don’t make a claim on your car insurance, you’ll start building up your no claims bonus and this could mean your insurance premiums are likely to get cheaper.
But if you’ve got a few years’ no claims bonus, is it worth paying to protect this? This is no claims bonus protection and it means that if you need to make a claim, you won’t lose your bonus. Let’s take a look at how this works and what the benefit of a no claims bonus is.
What it does
Every year you go without making a claim on your car insurance, you’ll build up an extra year of no claims bonus. This means that when you come to renew your car insurance, you could get a discount on the price of this based on how many years bonus you’ve built up.
No claims bonus doesn’t prevent the cost of your car insurance going up when you renew. Insurers use a few different factors when they’re working out how much you pay for car insurance including your age and your job. Even with your no claims bonus, the price of the policy could still increase. The point of your no claims bonus is that it’s a discount on your renewal price – sometimes as much as 50%.
You can only build up a certain number of years of no claims bonus and this will vary depending on your insurer. Some will only let you build up five years of no claims bonus and even if you don’t claim for another year, your no claims bonus stays fixed at the maximum amount.
But if you have an accident and you need to make a claim, this could affect your no claims bonus. Depending on your insurer, it could mean that you lose a couple of years no claims bonus or even that is disappears altogether.
That’s why you might decide to pay for no claims bonus protection. This is an extra feature on some car insurance policies where you can pay extra and if you have to make a claim, this won’t affect your no claims bonus.
Should you protect it?
As you’re paying extra for no claims bonus protection, it’s important to work out whether this is actually saving you money. For example, if your no claims bonus protection cost an extra £30 a year, how much could your insurance go up by if you didn’t have this and had to make a claim?
That’s why all car insurers now legally have to show the costs and benefits of no claims bonus protection. They’ll also have to show what can happen to your no claims bonus if you make a claim and how this can vary depending on how many years’ bonus you have.
If it’s time to renew and the cost of your insurance has gone up even though you’ve got several years’ no claims bonus, you might get a better deal by switching your policy. You can take your no claims bonus with you, so don’t think you need to stick with a more expensive policy to benefit from this. Check out our blog on how to cut the cost of your car insurance for more tips on how you could save.