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Losing your no-claims bonus isn’t the end of the world

The purchase of car insurance becomes ever more complicated, with few people fully understanding their no claims bonus or what it means to have ‘protected’ that discount. Ultimately, research has shown that losing your no claims advantage only makes a small difference in premium prices and isn’t anything to be too distressed about.

No claim discounts accumulate year on year, bringing with them up to a maximum of 75% discount on insurance policy prices. Some companies offer a protection of the no claims discount, but this does not mean that in the event of an incident where there is a claim, the premium doesn’t rise at all. Unfortunately this is a common misconception. What happens when a driver with a protected no claims bonus has an incident does include an increase in their premiums when they come for renewal – but the protected bonus applies the same level of discount to which they have previously been eligible. Therefore if a driver had a protected 60% discount on his premium and had an accident for which he claimed, he would still receive a 60% discount on his renewal: but the new policy would be priced higher in the first place. For most people, paying to protect their no claims discount does not make financial sense in the long run.

A no claims bonus can be lost for several reasons, some of which seemingly less fair than others. In each case, individual insurance companies have their own policies and regulations and questions should be raised with individual brands if you have concerns. A claim on the insurance policy will jeopardise the no claims bonus, though if you have paid to protect it you might be entitled to the same discount level on a higher premium the following year. When involved in a collision with an uninsured driver, most companies will remove a percentage of your no claims bonus because they will need to use your insurance to pay for repairing the damage as it can’t be claimed from the other party. Very few insurance companies protect the no claims bonus on incidents involving an uninsured driver, unfortunately. To repair a chip or crack in the windscreen using an approved repair company does not normally affect the no claims bonus, but if the windscreen is badly damaged and needs a full replacement this probably would. A full replacement is a standard claim, whereas a chip can be considered routine maintenance. Any instances where the insurer has to pay for services to your vehicle are likely to result in the loss of the no claims bonus.

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