Car insurance premiums have reached a record high at precisely the wrong time for motorists who have had to tighten their belts. The no claims bonus (NCB), also known as the no claims discount (NCD), has never been more important. Drivers can prove they are trustworthy through years without claims, driving down the cost of insurance.
Sadly, it only takes a split second to put a dent in your car and your spotless record. What is the best way of dealing with such an eventuality?
How the no claims bonus works
A year’s NCB is worth about a 30% discount while five years, which is most insurer’s maximum limit (though some will go up to nine years), is often worth 70%. It is no surprise, therefore, that drivers will look to preserve their no-claims record. In the event that they do make a claim, the NCB is usually reduced by two years.
Protecting your no claims bonus
The simplest way to protect an NCB is to avoid making a claim. If you suffer minor, affordable damage to your car, then work out what the cost of the reduction to your NCB will be before getting on the phone to your insurer; it could save you money just to pay for the repairs yourself. Insurers will also offer, for an increased premium (often of about £35), a protected no claims bonus policy. With this policy, a claim will not affect your NCB though your premium is likely to increase a little. Consider how often you drive, where you drive and how good a driver you are before going for such a policy, as the longer you pay the extra premium without needing to make a claim, the less cost-effective it becomes.
If you do lose your NCB or have a number of years shaved off it, take the opportunity to shop around for new insurance. Brokers and insurers are always looking to attract new customers and, besides, a traditional policy might not be the best deal for you anyway. Young drivers stand to benefit most from building up a NCB because they are considered the riskiest group of drivers, but a special young drivers insurance policy could yield significant savings regardless. Likewise, if they do not drive their own car, short term car insurance could be the way forward. Once an NCB has been lost or reduced the key is to build it up as quickly as possible and find ways of being considered a better driver in the eyes of insurers. It is important to keep driving – any NCB is usually lost with three or four years if you don’t drive in that time – and see if you can take a test like Pass Plus, which certifies advanced drivers. You can also find policies that allow you to build up your NCB while driving a company car or if you are a Named Driver on someone else’s policy.