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Home > How The No Claims Bonus Or No Claims Discount Works
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How the No Claims Bonus or No Claims Discount Works by Alevoor Rajagopal
How the No Claims Bonus or No Claims Discount Works A no claims bonus on your car insurance is a discount awarded on a renewal premium against the consideration not having made a payable claim in a valid previous year of insurance.
Simply put, a no claims bonus is applied at the time of renewal of a policy which certainly reduces the premium. However, a no claims bonus is applicable payable if there has not been claim paid in the previous year.
A no claims bonus is applied at origination of a policy and it varies from one insurer to another but typically will be in between 60-75% over five years and is applied as a discount on car insurance premium. There are companies that offer no claims bonus beyond 6 years of claims free policy years.
No Claims bonus is lost if... No claims bonus is to be earned through a whole year's claim free driving and still it is not something to cover future faults. This is what takes away much or all of no claims bonus in general cases of theft, at-fault accidents and in all similar cases where the insurer cannot recover its cost from anyone else. It may be hard to believe but, in reality, insurers pressurize drivers to not to admit responsibility for accidents.
In other accident situations where insurers have mutually identified each other and none having admitted responsibility, they will share their cost in any proportion at the cost of the combined no claims bonus.
But there is some light at the end of the tunnel too. A driver having had the maximum number of permissible no claims bonus years and then having his or her first accident, will not stand to loose with some insurers. Instead, the discount may be stepped back by a couple of years, say a reduction from five years to two years. It is worthwhile pre-checking this point with the insurer to make sure of their policy on no claims bonus beforehand.
It is possible to protect the no claims bonus by paying for it however it is not very much in popularity as it increases [http://www.carbargain.biz/Insurance/carinsur ]car insurance premium in most of the cases.
About the Author
It is possible to protect the no claims bonus by paying for it however it is not very much in popularity as it increases car insurance (http://www.carbargain.biz/Insurance/carinsurance.html) premium in most of the cases.
Alevoor Rajagopal, MBA, a business consultant, voices on fair practices in used car (http://www.carbargain.biz/) deals. He also writes passionately on showcasing individuality with MySpace layout (http://myspacelayouthelp.blogspot.com/).
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