Understanding Your No Claims Discount

Sep 28

Car insurance is vital for every driver, and you will need to understand the different policies, and how they can help you in the event of an accident. Motor insurance remains the largest class of non–life insurance at almost €1,333m (43% of all non–life business).  Many drivers choose to take out no claims bonus policies, which are far cheaper than other alternatives (http://www.iif.ie/LinkClick.aspx?fileticket=qPJ6tGGoYd0%3d&tabid=89&language=en-GB).

Your no claims bonus is accumulated every year that you drive carefully, earning you a greater discount. Many companies will stop reducing the discount after 5 years; however, there are some that continue up to 8. In many cases you cannot share the no claims bonus between different cars.

The no claims bonus will be affected by every claim that you file, irrelevant of who was at fault. This goes for if:

  • Your car is stolen
  • You are in an accident
  • Your car is vandalized

If your claim can recover some of the outlay from the other party involved, in which case your bonus will be reduced but not removed. Claims involving uninsured drivers for example add approximately €45 to the cost of the average motor insurance (http://www.iif.ie/LinkClick.aspx?fileticket=U-OMUD9zsfI%3d&tabid=54&language=en-GB).

Various companies offer different values for their no claims discount. For example, In Ireland, assessments on your car insurance situation can be made at 123.ie. This service is well worth inquiring about if you are coming up to renewal.

If there is no agreement as to who is at fault for the accident, you will both lose a proportion of your no claims bonus. Unfortunately, this happens often, and good drivers lose some or their entire hard earned bonus. This is why drivers are encouraged to take responsibility for their actions, and respect other drivers.

However, if you have built up your no claims bonus, and it exceeds five years without a claim, all insurance companies take this into account. A smaller proportion of your discount will be removed, and in some cases you may lose a couple of years. Reading the policy in full before you take it out is essential. This will ensure that you understand what will happen to your policy in the event of an accident.

If you need to renew your policy before it is decided who was at fault for the accident, you may find that the amount quoted is temporary. Once the investigation has been conducted, you may find that the amount of no claims bonus is reduced, and your policy is increased. However, if the accident proves to be, not your fault, you may receive more of a no claims discount, and a refund.