No claims insurance bonus is related to the claim history of the driver. Not claiming any insurance for the insured time period means higher no claims bonus which directly affects the amount of insurance premium you pay for your car. For example, having your car insured for five years means that each subsequent year without any claim increases the bonus that is given by the insurance company. The worth of the no claim bonus varies from company to company.
The higher your no claim bonus is the lower is the premium charged. This is an incentive given by the car insurance company which sees the driver’s claim history to determine what kind of an insurance premium to setup. While switching between insurance companies, the new one will ask the driver to prove his claim history in order to assess the risk factor involved in advancing a car insurance. A no claim bonus is earned every year and is generally limited to a five year term although some companies may extend the same to six to eight years. A no claim bonus can entitle the driver to get up to a 65-70 percent discount on the insurance premium charged by the insurance company.
A no claim bonus is different from a no fault bonus and is, lost even if the driver is not at fault. The basic premise is that if the driver ends up asking for a claim partly or fully the no claim bonus will be lost. In cases where the fault cannot be ascertained fully and the parties end up sharing the costs, the no claim bonus is affected. The same is the case where the car is stolen. Since the driver ends up laying a claim which may or may not be fulfilled by the other party the no claims bonus is affected and is effectively lowered or completely lost based on how much the cost of repair is. All may not be lost though since insurance companies do want to keep hold of good drivers and some companies may reduce the bonus year from five to two years and the driver may end up getting at least some of the bonuses. It is recommended to check with the insurance company about no claims policy.
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Sometimes the premium has to be adjusted before the fault can be determined. In such a scenario the driver may end up paying more in a temporary arrangement due to a reduced no claims bonus. Once the fault has been determined and the costs ascertained the driver can take up the case with the insurance company and may be refunded the increased amount that had to be paid initially.
Drivers can opt to protect their no claims bonus by paying for it. Although this does not necessarily decrease the premiums in case of a claim being made it does affect the claim history positively. The no claims bonus is not lost fully and shows up in the claim history of the driver for renewal of insurance. So even if the premium increases it does not increase by the amount that would be charged without a no claims bonus.