The no-claims bonus, also known as no-claims discount, might come with a degree of perplexity if the insured does not know the full works on how such a bonus is allocated. To dispel any hearsays, our insurance representatives have summed up most of the common questions our clients have, to help you understand the works behind this bonus and make the right questions to your insurer.
#1. WHAT IS A NO-CLAIMS BONUS?
A no-claims discount recognises the number of years an insured hasn’t made a claim on his vehicle. This bonus is allocated to car insurance policy holders on every private and commercial insurance policy when no claims are lodged.
#2. HOW IS THE NO-CLAIMS BONUS CALCULATED?
A policy holder earns a discount every year upon motor insurance policy renewal if no claims are made within those twelve months. Each subsequent 12-month period, an additional discount percentage is allocated. The ability to earn the full no-claim bonus depends on the type of policy issued, however, no-claims discounts are normally capped at five years. Best to check with your insurance provider on how your policy calculates the no-claims discount.
#3. HOW IS A NO-CLAIMS BONUS LOST?
Once a claim is lodged, upon renewal of the following year, the no-claims bonus will be stepped down. In order to have the no-claims discount stepped up again, the policyholder needs to have a full 12-month period claims free. This can be avoided if no claim bonus protection is purchased. Contact our insurance team for further information.
#4. MAY I ASK MY INSURER TO TELL ME MY NO-CLAIMS DISCOUNT VALUE?
Yes, your insurer would be able to tell you the percentage currently reached of the no-claims discount, as well as the number of years of entitlement.
#5. DOES THE NO-CLAIMS BONUS APPLY FOR CAR INSURANCE OR DO OTHER POLICIES BENEFIT FROM SUCH A DISCOUNT?
The concept of no-claims bonus is mainly available for car insurance policies. However, certain boat insurances also benefit from such a discount. Should you be a boat owner, ask your insurer to inform you about no-claims bonuses allocated with your marine insurance policy.
#6. CAN A NO-CLAIMS DISCOUNT BE ALLOCATED TO MORE THAN ONE CAR?
A no-claims bonus is allocated only to one policy. Someone who owns two or more vehicles, would have separate policies for each car. Hence, if one car has been involved in a collision, only the no-claims to that particular car under its specific insurance policy will step back. The no-claims discount of the other vehicles will remain intact.
#7. I JUST BOUGHT A NEW CAR TO REPLACE MY PREVIOUS ONE. WILL THE NO-CLAIMS DISCOUNT STILL APPLY IF I TRANSFER MY CAR INSURANCE POLICY TO COVER THE NEW VEHICLE?
A no-claims bonus can be transferred from one vehicle to another. The insured may transfer his/her motor insurance policy to cover the new car and the no-claims discount will still apply.
#8. WILL THE NO-CLAIMS DISCOUNT APPLY IF I CHANGE THE POLICY HOLDER OF A VEHICLE?
A no-claims bonus is earned by the policyholder and it can only be transferred in certain specific circumstances, such as between spouses. Speak to your insurer for further details.
#9. IN THE CASE OF AN ACCIDENT, WHO LOSES THE BONUS: THE POLICYHOLDER AT FAULT OR THE VEHICLE OWNER WHO OPENS THE CLAIM?
A no-claims bonus, as the name suggests, is linked with the setting of claims under a specific policy, not to fault. Consequently, a no-claims discount is lost once a claim is registered by a policyholder, whether at fault or not. Nonetheless, if a policyholder is covered with a comprehensive insurance policy and if the insurer is successful in recovering all the costs from the party at fault (or their insurers), then the no-claims bonus difference is refunded to the policyholder.
#10. DOES A POLICYHOLDER GET A NO-CLAIMS BONUS ONLY WITH COMPREHENSIVE INSURANCE POLICIES?
Have any questions which we didn’t delve into here? Send us a message on Facebook or contact us so our insurance staff will resolve any issues you might have.