No claims bonus
No claims bonus
We are often asked what no claims bonus actually means.
Most people think there are firm rules about a no claims bonus and that every insurance company operates in the same way. Well this is not so. When an insurance company offers a no claims bonus it is offering a discount. Discounting a price is a sales technique, and a no claims bonus is no more than that, it is a sales technique.
There is no minimum and no maximum number of years to be included as insurers differ. The other thing that differs between insurers is the amount of discount they will offer for a number of years no claims bonus.
So there is no hard and fast rule and the only way to get the maximum benefit for not claiming is to shop around and find which insurer will give you the best discount. Of course some insurers will quote a lower premium than others so it may be the cheapest payable premium may not be the one with the best deal for your no claims bonus.
I was reminded of the no claims bonus confusion by a very good piece on the BBC Radio 4 Moneybox programme broadcast on 15 February 2014 which you can find at http://www.bbc.co.uk/programmes/b03v9np9
The BBC reporter compared insurance quotes for his Honda Civic car with a number of insurance companies. He was rather frustrated that his own insurer was not rewarding him for being a loyal customer and not claiming on his policy. The greater benefit seemed to be available from other insurers competing to take on a new customer.
We agree with that frustration as time and again the customer who stays with the same insurer is penalised to subsidise the race to win new business on the comparison sites. One day an insurer will realise that heavily discounting premiums to win new business is more expensive than being fair to your existing customers.
The confusion then continues when you are offered insurance to protect your no claims bonus. You are being asked to insure a sales discount when another insurer might offer you insurance for less with or without a claims record. Like I said at the outset, there is nothing written in stone about no claims bonuses, the only answer being to shop around every time you renew your insurance policy.
Good luck out there in a confusing market place.