A no-claims bonus is a unique feature in the UK car insurance marketplace that applies to motorists who drive their vehicles safely throughout the duration of a valid policy. Put simply, car insurance carriers will reward motorists who don’t make any claims on their policy while previous coverage is in force with a discount that is subtracted when the policy is eventually renewed.
After the first year of accident-free driving, a motorist can expect to see their car insurance premium fall by approximately 30%. As time goes on, this figure will increase incrementally until the maximum threshold of 60% is achieved. If the policyholder is ever involved in a road traffic accident, accumulated bonuses are removed and the price of a car insurance policy will be reverted back to the standard rate with the possible inclusion of an additional premium if underwriters feel that the level of risk has actually increased since the initial policy application.
Many car insurance companies now have a protected no-claims bonus scheme that operates in the same way as accident forgiveness in the United States. A protected no-claims bonus allows the policyholder to be involved in one accident without losing any accumulated discounts. However, further incidents will see premiums reverted back to the standard rate.
When a new car insurance policy is purchased, UK road users should take time to consider the implication of no-claims bonus discounts. If a Fully Comprehensive policy is purchased, motorists should insist on having a protected no-claims feature factored into it.