Reducing Car insurance Premiums - No Claims Discount (NCD)
Every year you have personal vehicle insurance and you do not make a claim, your no claims discount builds up. After 5 years without a claim, you will have a full no claims bonus. This can save you up to 60% off your premium and as such is the single biggest factor in reducing insurance costs.
If you cause a minor
accident, it is often worth considering paying for the damage without involving
the insurance companies. As it will take 5 years to fully rebuild your no claims
discount, claiming for even the smallest amount could cost you thousands of
pounds over a five year period.
e.g. suppose with a 60% no claims bonus your insurance was £200
| No Claims Discount | Insurance Premium | |
| Year 1 | 0% | £500 |
| Year 2 | 20% | £400 |
| Year 3 | 30% | £350 |
| Year 4 | 40% | £300 |
| Year 5 | 50% | £250 |
| Year 6 | 60% | £200 |
The total extra cost over five years would be £800. Therefore if you caused less than £800 of damage, it would be less expensive to pay for the repairs yourself. If your premium was £400 with a full no claims bonus, then a claim would cost you £1600 over five years.
The value of NCD must never be underestimated. The only way to maintain this is to ensure that you never cause any accidents or pay the extra for a protected no claims bonus. When the insurance companies cannot determine who caused the accident, usually both companies claim from each other with the result of both drivers losing their NCD.
Protected No Claims Discount (PNCD)
If you have fully comprehensive cover, for a small premium you can have a protected no claims discount or PNCD. This will usually allow up to two claims per year without the loss of the NCD. If you make a claim, your premium will rise the following year as the accident will be on your record but you will still keep your NCD. All insurance companies offer different options so check the details carefully.
This option must be considered carefully. If you have full NCD and your premium is high or if you have your children added to your policy, PNCD could save you a lot of money.
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