If you are trying to find ways that you can save some money on the insurance you need for your vehicle, one thing you need to know about is a no claims discount. This special discount can be used to reduce the cost of your premium. Of course, you may not know how the system works or about the benefits. Here is a closer look at the theory behind this discount, how it works and how you can benefit from it.
First, you need to realize that the premiums you pay on cover for your car is based upon the amount of risk that you pose to a company. A lower risk will result in a policy that costs less. Of course, if you are considered to be high risk, you can expect to pay more. If you have never had to make a claim or you have not had to make a claim in the past few years, companies will see you as less of a risk, so they will not charge you as much for the cover that you need. Basically, this no claims discount is a special reward for not having to make claims and it helps to reduce the premium for you. Usually you get this as a percentage off your policy. Year after year, you can continue to build it up until you are saving more than 60%, although most companies have a cap on the percentage you can save.
So, how does all of this work? Well, every insurer is going to calculate the no claims discount in their own way. Usually there is a bonus schedule that will let you know about the discount you can receive. Sometimes there is a maximum number of years that you are allowed to build a discount, although most companies set it at five years. For example, if you have gone for a year without making a claim, you get 10% off the policy cost. Two years could get you a 20% discount, three could give you 30% off and four could give you 50% off your policy. Once you get to five years, the maximum amount of years, you can start getting 70% off your premiums, which is definitely a significant savings.
Once you build up this bonus, you do have the option to protect it. Basically this allows you to insure the discount that you are getting. When you do this, you basically ensure that you can make a claim in a certain period of time without losing that discount that you have built up over time. While it can cost a little bit more to protect the no claims bonus, it is well worth it to make sure that you keep your premiums on car insurance low, even if you have to make a claim.
The financial incentive that many companies are offering today is one that can help you make sure you drive more safely. When you concentrate on driving and you are careful, you are less likely to end up having to make a claim, allowing you to build up that discount. Check with your company to see if this type of bonus is available to you. It's another great way that you can save on your car insurance.