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Thursday, 17 April 2014

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What is a 'No Claims Discount' and how do you prove you have it?

Have you ever thought about taking out no claims discount protection for your car insurance? In car insurance, the length of your no claims period can be the most important factor deciding how expensive your premium will be, and can make the difference between paying hundreds of pounds a year and paying thousands.

Generally speaking, insurance companies do not like to take big risks, and will see any driver that has made a claim on their car insurance in the past few years as being a much bigger risk than an experienced driver that has never had to. In between these extremes, a driver who might have claimed a good few years ago, but has not claimed since, will have built up some degree of credit with insurers, and will pay less than a recent claimant, but a little more than someone who has driven for several years and never claimed.

So, we can see why it might be worth taking out additional cover for your no claims discount, as it could be worth thousands of pounds to you in the long term. Most insurers will offer a discount of up to 60% on their premiums for drivers with a long history of driving without making a claim.

Compared to the potential cost of making a claim, the cost of no claims discount protection is relatively meagre. Such a policy would enable you to make one claim during each year of your policy without losing the car insurance discount that you have built up. If you have two claims within a year, your no claims discount will be reduced by two years, and any further claims in that year will reduce it by a further two years. So even if you have an incredibly unlucky year in terms of auto accidents, you will still most likely come out of it in better shape than if you didn’t have any no claims protection.

Let’s say that you have been driving around in a highly responsible manner for six years, building up a healthy no-claims discount in the process. Then, one day, you are parking the car and suddenly, another car crashes into you, leaving a fairly hefty dent. Although the accident is not really your fault, the insurer of the other driver says that it was, and your insurer wants to go 50-50 on the claim. This means that you will lose your no claims bonus, as well as having to pay the excess on the claim.

Now, if you had no claims discount protection, your no claims discount won’t have been affected by this incident. You would simply have had to pay the excess on the claim. Your insurer will continue to treat you as the responsible driver that you are, and you will continue to save hundreds of pounds a year on your insurance policy. It should be noted, however, that this type of insurance will only protect your discount percentage, and that the cost of your premium could still rise due to other factors.

This information was provided to you by Allianz Your Cover. If you would like more information about No Claims Discounts, please visit www.yourcoverinsurance.co.uk.

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