No Claim Bonus
A no-claim bonus is a reward system used by many Insurance Companies on car insurance policies as an incentive and given to insured parties if no claim was made during a certain period of time. The time period during which no claims must be made is normally between three to five years.
No-claim bonuses can be paid out as a cash-back bonus – usually one year’s premiums. The incentive can also be in the form of reduced premiums after the initial claim free period was reached. Some companies will pay out the no-claim bonus and also decrease your rate after the applicable period has expired.
When you move from one insurance company to another the new company will take your previous no-claim status into account when quoting a premium to you. The new company will require some form of proof that you made no claims, such as your renewal notice. The claim-free system or groups is based on groups according to the number of claim-free years.
No-claim bonuses are not fault-related which means that even if a claim was not due to any fault on your side, you will still loose your no-claim bonus. You can protect your no-claim discount if you have a number of no-claim years by paying a small additional premium. Small claims such as windows/windscreen will not affect your no-claim bonus, but always check the small-print on your policy. It will be in your best interest to carry small claims yourself rather than loose your no-claim bonus.