Car insurance can be a significant expense, with British motorists paying an average of £760 per year to their auto insurers. But convince that insurer you’re a safe driver—and that it never hails in your neighbourhood—and you can rack up a no-claims bonus that pares down your monthly premiums. No-claims bonuses (NCBs) are a great cost saving tactic and they accumulate the safer and luckier you are. According to The British Insurance Brokers’ Association, a year without a claim can save a driver 30% on their premiums, two years can deduct 40%, and with five or more years you could be looking at maximum discount of 60-65%.
Here’s how to make the most of your no-claims bonus, ensuring you don’t lose it when you switch insurer and even when you make a claim.
- Drive safely
It almost goes without saying: if you want to avoid making a claim and blowing your no-claims bonus, the best way is to avoid an accident. Of course, you can’t always account for other drivers’ distraction and recklessness—and sometimes even a collision caused by another motorist can impact your NCB—but you can control your own driving. That means putting mobile phones and other devices away, taking breaks during long drives, not relying too heavily on a GPS, not driving late at night or when you’re tried, keeping your car in a good state of repair, leaving enough following distance, and taking extra precautions in poor weather.
- Take precautions against theft and weather
The risks to your car—and your NCB—don’t stop when you park it. Avoid being forced to make a claim for the theft of your vehicle by keeping it locked at all times, never leaving it running unattended, parking it in brightly lit and well-trafficked areas, storing it inside a garage, and installing an alarm or other anti-theft system (some of these precautions may also notch you savings on your premiums).
Some of the other greatest threats to your vehicle don’t wear balaclavas. They come instead from the sky: hail that damages your bonnet, a tree that plunges through the boot. Avoid weather damage to your vehicle by parking it in a garage or a covered location, keeping it away from large trees, and always roll up your car windows. If you must drive in inclement weather, do so cautiously.
- Use accelerated policies
Some insurers offer accelerated policies in which you can earn another year’s no-claims bonus in 10 months rather than 12, allowing you to rack up savings more quickly.
- Understand what happens to your NCB when you make a claim
When you make a claim on your car insurance, the industry norm is to subtract 2 years from your NCB. However, sometimes insurers will only consider 5 years of your NCB when reassessing it, meaning many people end up with just 3 years following a claim, even if they’ve accumulated 8 or more. If you make a claim for theft, damage, or an accident for which you were at fault, those 2—or more—years are vanishing.
But even if you weren’t at fault in an accident, you can still suffer a deduction of your NCB if your insurer is unable to reach a settlement with the guilty party’s insurers.
- Know the different policies of different insurers
Insurers will allow you to accumulate—and transfer to them—different maximum NCBs, generally ranging from 5 to 8. They’ll also have different policies about deducting years from your NCB for claims. It’s important to read the terms and conditions of any policy when you compare car insurance, especially if you’re transferring a large NCB from another insurer.
- Protect your NCB
You may be able to pay an additional amount on top of your premium to protect your NCB, so it remains the same even if you make a claim. This may be a worthwhile precaution if you’re racked up multiple years of NCB. But it’s important to remember that even with a protected NCB your insurance premiums will rise at renewal, as premiums are calculated based on both NCB and the number of claims you’ve actually made.
- Transfer to your NCB to another insurer
You’ve shopped around and found the best car insurance policy, but you’ve already racked up a sizeable, and lucrative, NCB with another insurer. Luckily, you can transfer NCBs from any insurer within the UK and many within the EU. You’ll simply need proof of your NCB when you switch insurer. Often your years of no claims will be included in the letter your current insurer sends you when your policy is up for renewal or cancelled. You can also request this proof from your insurer.