Are You Reaping the Benefits of the No Claims Discount? Article

For each year that a driver can achieve a claim-free status, he earns a discount that is taken off his next year's cost of his motor vehicle insurance cover. Typically, this discount accumulates over a number of years until the driver reaches his maximum allowable No Claims Discount. In general, after five or six years, a driver reaches the limit on his discount or bonus.

The No Claims Discount percentage that is earned by motorists with claim-free driving records varies from one insurer to another. This amount generally starts out with a small amount for the first year of the No Claims Discount. Each successive year this amount increases until it reaches the maximum amount that the insurer will allow. Some insurers bump this value up by a large amount (as much as 30%) from year one to year two.

The maximum No Claims Discount usually falls between 60 and 70 percent, depending on the insurer. Each year that a policyholder has this type of bonus, the percent that he has earned is deducted from the cost of his insurance coverage, greatly reducing his cost for insurance.

Protecting the No Claims Discount

Drivers who have achieved their bonus over the course of five years or so might want to take advantage of the option to protect their No Claims Discount. Typically, insurers offer policyholders the chance to pay a small additional amount with their annual premium cost in order to protect their No Claims Discount. In most cases, it is worth this small additional fee to maintain the discount.

Motorists with this type of added protection can then place a single claim against their insurance cover without worrying about losing their bonus. While drivers have the option to pay the expense of any repairs incurred after a motor vehicle accident, the cost of some repairs might be so expensive that they prefer to use their insurance coverage to pay for them. If they have protection in place, then they can do so without changing the value of their No Claims Discount.

Earning the No Claims Discount

Generally, a driver must have his own motor vehicle insurance cover policy in order to earn the No Claims Discount. A few insurers have guidelines in place that allow young drives who are included on a parent's policy to accrue a record of good driving habits that can be transferred should they get a car insurance policy of their own with the same insurer.

Although it has become easier over the years to transfer a No Claims Discount from one insurer to the other, this isn't always possible with all insurance companies. Therefore, it is important to ask questions concerning your ability to transfer your claim-free years from one insurer to the other should you decide to cancel your car insurance cover with your current insurance company.

Article Source: http://www.mycontentbuilder.com

Otha Zomberg is a keen writer about cheap car insurance and house insurance products.

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