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No Claims Bonus:
You can reduce the amount you pay for your insurance premium by earning a no claims bonus. No claims bonus can only be earned when you have had a vehicle insured in your own name for a minimum of a year and have not made a claim against the insurance policy. An important point to remember is that a no claims bonus is usually only valid for up to two years after the expiry of the policy under which the bonus was earned.
The maximum discount entitlement can vary for each Insurer: some can give up to 75%, others just 60%. Insurers may give the maximum entitlement after 4 years and with others it maybe after 9 years. However, the most important point is the amount of net premium quoted after the allowance of the no claims bonus, not the percentage discount i.e. to actual amount of money you pay.
Making a claim can have a serious impact on the premium you pay at the renewal date of the policy. For 1 fault claim in a year an insurer would usually step back the maximum no claims bonus to 40%, and if you were unfortunate enough to have 2 fault claims, the no claims bonus could reduce to 0%. Therefore it is worth considering adding no claims bonus protection to your policy. You can only add this benefit if you have earned at least 4 years no claims bonus and some insurers will only consider if the policyholder is 25 or over. The additional premium to add no claims protection is usually between 10 – 15% of your net premium, however for this extra charge you have peace of mind in that you will not lose any of your no claims bonus if you have an at fault claim. Indeed some insurers allow you to have 2 fault claims within a 3 or a 5 year period without reducing the bonus entitlement.
Excess:
An excess is an amount of money that you have to pay in the event of a claim. Excesses are added into policies to stop people from claiming on very small incidents, such as damage to a wing mirror. Usually the higher the excess level applied the lower the premium will be.
There are two types of excess, voluntary and compulsory. The compulsory excess is the excess that the insurer adds on to the policy and it will vary by insurer so be sure to check. The voluntary excess is an additional excess that you agree to pay, usually arising in increments of £50.
Remember that in the event of a claim the excess that you have to pay will be both the compulsory and the voluntary excesses added together. If you are under 25 some insurers also add a “young drivers excess” which will have to be paid in addition to the two excesses mentioned above. Remember to check with the insurer for full details so you know what you need to pay in the event of a claim.
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