Car Insurance No Claim Bonus
If you are a young driver or an older new driver who has never purchased a car insurance policy before, you may well have heard of but not be aware of the meaning of the terms ‘No Claims Discount’ or ‘No Claims Bonus’. Most certainly when you first take out car insurance it is highly unlikely that the concept of these discounts was not explained to you, as they are not applicable in the first year of a car insurance policy. Essentially the two terms are the same and mean that for every year of claims free driving you will receive a discount on the following year’s car insurance premium. The discount is the amount as a percentage that will be allowed against the car insurance premium you pay, the Bonus concept of the number of years without claims expressed as an amount. The two terms are interchangeable as you may often see the expression NCD or NCB used throughout a car insurance policy key facts document.
Rewarding Good Driving with Cheap Car Insurance
The amount of the discount will vary from company to company and is usually larger in the first few years, possibly even thirty percent in year two, and decreases over each subsequent year up to a fixed number of years, usually five or six. When you have achieved five or six years of driving without having made a claim you are said to have accrued ‘Maximum No claims Bonus’. Each and every Car Insurance Company will have a limit on the number of years it will allow you to build towards your maximum no claim period. The amount it will discount against the premium for someone who has maximum no claims is usually around sixty percent but with some specialised car insurers this can be higher, sometimes seventy percent or higher as these companies have a better ‘risk pool’ of similar drivers or vehicles covered, and though better knowledge of the market can adjust their rates accordingly.