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Important things to know about your no claim bonus

Many people get quotes for car insurance and have no real idea what can cause those quotes to increase or decrease in price. With many factors involved in the cost of your car insurance premium every year, having a no claim bonus is the most important one.

If you're not sure what a no claim bonus is, here's what you need to know, as well as how to make sure you keep it.

What you need to know about a no claim bonus

What is a no claim bonus? - Known also as an NCB, a no claim bonus is something that you earn. For every year you have car insurance, if you don't have any kind of claim (accident, fire or theft), you earn a 'no claim bonus' at the end of the year.

That no claim bonus can then be applied to your car insurance for the next year, making your insurance premium cheaper. For every year you don't have a claim, you earn another year's NCB, with a maximum, at most car insurance companies, of five years.

Why is a no claim bonus important? - If you have an NCB it tells an insurance company you're likely to be a low risk. So, as a result, your insurance premium is less. As a five year or longer NCB can reduce your car insurance premium by up to 60%, you can only imagine how much money you will save.

Does an NCB apply to all cars you own? - No, it doesn't. An NCB can only be used to insure one car so, if you have two or more cars you also need to insure, they would have to have been insured in the past, and an NCB earned on each of them.

Should you make a claim? - If you have a small accident and are thinking about making an insurance claim, before you do, calculate the amount of money you'd likely get from the insurance company compared to what you would lose with your NCB discount (remember, as soon as you have a claim, your NCB is lost). If you'd lose more money without an NCB, then pay for the accident out of your own pocket.

Why do you lose an NCB if your car is stolen? - Some people mistakenly think an NCB can only be lost if they have an accident while driving. That's not true. If your car is stolen and you claim for the cost of replacing it, even if it's not your fault, you've still made a claim - and your NCB disappears with it.

Remember, you don't have to be the one at fault to lose your NCB, you only have to make a claim.

Other ways to get an insurance premium discount

If you've never had insurance under your own name before, of course you're not eligible for an NCB. You may however be eligible for a discount if you've driven on someone else's policy, even if it's just your dad's or your company's policy.

If the car insurance company can get proof from the insurance company your dad or company uses, that you've never made a claim, chances are they'll give you an introductory discount.

While it might not be as much as an NCB, it's a good start, and your new policy will now enable you to start earning a no claim bonus of your own.

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