What is a no claims bonus and is it worth protecting?

When it comes to looking for insurance providers who offer long-term value, it is always worth considering their no claims bonus. Below we have explained what a no claims bonus is and whether it is worth protecting.  

In short, a no claims bonus is a way an insurance provider rewards their policyholder for not claiming. This comes in the form of a discount on their premium, with some insurers increasing this discount the longer you go without a claim.  

While in theory you could earn enough in discounts to cover your entire insurance premium, insurers generally cap your no claims bonus at a certain threshold.

Otherwise, if you do eventually make a claim, insurers can typically take away some if not all of your no claims bonus. 

In some instances, it can be better not to claim on your insurance policy to protect your no claims bonus. For example, if your car sustains minor damages then it could be worth fixing this yourself rather than risking your no claims bonus built up over an extended period of time.

In some instances, such as if you were involved in a car accident which was not your fault, you can still claim and your no claims bonus will remain unaffected.

For a smaller fee, some insurers offer no claims bonus protection. This allows you to make a certain amount of claims without it affecting your no claims bonus. Some people find this worthwhile as it gives them peace of mind that years of building up their discounts is somewhat protected in the event of a claim.

Some insurers do not charge a fee, but include a limit instead on the number of claims you can make before your no claims bonus is affected.

While there are cases in which people have transferred their no claims bonus between providers, it is up to the insurer’s discretion as to whether it is accepted.

It is the same if you have moved to the UK from another country, and if your no claims bonus is to be accepted you will need proof.

In order to transfer your no claims bonus to a different provider you will need to acquire proof from your previous provider. This can be found on the documents in your insurance renewal or cancellation notice.

If this cannot be found, then it is best to contact your previous provider directly for confirmation.