Cheap Car Insurance - No Claims Bonus
As the years pass by for a driver who has not made an accident claim on his or her car insurance, the possibility of getting discounts on their premium goes up. After one year of not claiming for an accident, a driver may get 15 percent off their insurance and after six years they may get as much as a 65 percent reduction. The amount will vary with different insurance companies. This is called a No Claim Bonus (NCB) and may be transferred when changing insurance companies.
How the Insurance Company Views Customers
Car insurance companies view customers with an assessment of risk. The risk is calculated by age, driving record, driver training and other factors. Drivers in a high risk category are seen to have more chance to have an accident for which the insurance company will have to pay compensation. Because of this, they charge higher premiums for high risk customers and lower premiums for low risk customers.
There are ways drivers can lower the risk for insurance companies and thereby get lower premiums. One of the ways is to have a record of making no insurance claims for an accident. This will give the driver an NCB.
Lower the Risk
Driving records are available to insurance companies to help evaluate risk for a customer. They use sophisticated statistics and factors to determine the chance that a driver will make an insurance claim. This will affect the insurance premium.
Some other factors are:
• Location of residence in the UK
• Parking overnight in an area with a high crime rate
• Young drivers are often considered a high risk because of reckless driving
• Old drivers are considered a high risk because of slow reaction times and fading eyesight
• Type and model of car
• Car modifications for racing
• Smokers
• Installation of theft safety devices or immobilizers
These factors are combined with the driving record to make a complicated calculation for the cost of an insurance premium.
No Claims Bonus
The NCB or no claims discount is simply calculated. If the driver has not made an insurance claim for many years or has never made a claim, he or she is considered less likely to make one in the future. The reward for not making a claim is the bonus or discount to car insurance premiums. The discount will be recalculated every year the driver does not make a claim and will continue to reduce the cost of premiums.
The exact amount of discount will vary for different insurance companies. They will have a maximum number of years to receive the discount. The general rule is 30 percent for one year and 10 percent added each year until reaching 65 percent for five years.
Some insurance companies offer accelerated schemes where drivers get a NCB for one year after only eight months of driving with no claim. This is a good option for young drivers who usually have much higher premiums.
No Claim Bonus Protection
A NCB can be insured with most companies in the UK. NCB protection needs to be added to the insurance policy after the driver has reached the maximum level of discount. Depending on the insurance company, the driver will be allowed to make one or more insurance claims usually within two to five years without losing their NCB.
Remaining claim-free will save a driver hundreds of pounds on car insurance in the long term. This is a strong incentive not to report very minor accidents to the insurance company and personally pay for the damages. One claim may remove two years from a NCB. If the driver has a three year discount, it would be reduced to a one year discount.
