What is the No Claim Bonus
When it comes to car insurance, it is a reduction that you receive every year if you don't make a claim. The value depends on the insurers, but it is essential for rewarding safe drivers by giving them lower premiums. Indeed, for every year you earn a No Claim Bonus because you drive safely and you don't get into accidents, you will receive a reduction in your premium until a full bonus is reached after a set period. A full No Claim Bonus is the maximum reduction you can have if you do not make a claim. If you reach the full bonus, you cannot have other reductions as it is the maximum.
Claims Affect Your No Claim Bonus
When you have to make a claim you will lose some (or all) of your No Claim Bonus. The same thing happens if you are in an accident and the other driver makes a claim against you. On the other hand, if you are in an accident and it is not your fault you can claim off the driver insurance and your No Claim Bonus won't be affected.
Note that if your car is stolen or damaged this will also affect your No Claim Bonus.
It is very important for people to protect their No Claim Bonus if they don't want to pay more. That is why there are some protection like Protected No Claim Bonus or Step Back No Claim Bonus Protection.
Solutions to Protect Your No Claim Bonus
Protected No Claim Bonus:
This is the full protection and you won't lose any of your No Claims Bonus. It is an optional cover which allows you to make a specific number of claims without your bonus being affected.
Step-back No Claim Bonus Protection:
Having Step Back Protection on your car insurance will prevent you to lose all of your No Claims Bonus. If a claim is made against you, you will lose part of your No Claims Discount, but not all of it. But with Step Back Protection, the amount of no claims will step back to a lower percentage. The amount that is lost will depend on the insurance company.
Even if you have to pay more with the Step Back Bonus Protection, you will be safer as it allows you to keep from losing all of your No Claims. So in the end, you won't have to pay more.
Note that if you don't own insurance for a period of time for some reasons, some insurers may not honour your No Claims Bonus when you apply again.