A no claims bonus is a reward offered to motor insurance customers who have not issued a claim for compensation during their policy period. The bonus given is usually a discount off the following year’s premium. Insurance buyers can receive no claims bonuses year after year and as a result, these rewards can amass to quite a large saving on the policy price.
The vast majority of insurance companies offer and accept up to five years worth of no claims bonus, however a single claim and all the accumulated years will be lost. Due to this, many drivers often choose not to make a claim on the insurance for smaller accidents as the cost of repair is often less than the money saved from the no claims bonus. With this in mind, many policies offer the opportunity to protect them for an additional fee. There are generally two schemes in which this takes place.
1) Complete protected no claims bonus – this is where the drivers no claims bonus is protected regardless of how many claims are made within that policy’s lifetime. This option normally demands a premium fee.
2) Partly protected no claims bonus – this is where, for an additional fee, the motor insurer guarantees that the policy holder’s no claims bonus is protected for the entire year. However, should two claims be made within the given time-frame, the policy breaks and the accumulated no claims are lost.