A no claims bonus can help lower the cost of your van insurance premium significantly, but how do you earn it and what happens if you make a claim? Here, we take an in depth look at how no claims bonuses work and what you can do to protect yours.
What is a no claims bonus?
A no claims bonus (NCB) is a discount on your insurance premium and is usually expressed as a percentage. It’s also called a no claims discount (NCD).
A no claims bonus is awarded each year you drive without making a claim. For example, if you’ve driven for five years without making a claim, you’ll have earned five years’ worth of no claims bonus.
How much discount will I get with a no claims bonus?
The percentage discount you get will depend on the insurer as they’re responsible for setting their own terms and conditions. Generally speaking, you can expect one year of claim free driving to earn you a discount of 30%. This discount will be deducted when you come to renew your annual policy. After that your discount will increase by around 5% or 10% each year.
Most insurers will cap the no claims discount at about 75% which you can earn after nine or more years of claim free driving—however, this will vary according to the insurer.
Is the value of a no claims discount the same with all insurers?
No, the percentage discount varies by insurer. For instance, if you have four years’ worth of no claims bonus this could lower your premium by 40% with one insurer but 50% with another.
How much is a no claims bonus actually worth?
Your NCB doesn’t have an intrinsic value. As it’s a discount, its value can only be calculated when you know what your premium is. Most of the time, when you see a quote, it will already have taken your NCB into consideration (you’ll usually be asked about your no claims when you begin your search).
Nevertheless, knowing what your premium is before the discount can give you a good idea about the savings you’re making and the value you’re getting. For example, let’s say you have six years’ worth of no claims which is worth 60% off with insurer 1 and 70% with insurer 2. At first glance, insurer 2 looks to be the better deal but that’s only really true if the original premiums are the same.
|Van No Claims Example 1||Insurer 1||Insurer 2|
|Premium after discount||£360||£270|
But if insurer 1’s premium was £1000 and insurer 2’s was £1500, then insurer 1’s quote is actually cheaper.
|Van No Claims Example 2||Insurer 1||Insurer 2|
|Premium after discount||£400||£450|
Can I earn a no claim bonus for a policy I cancel?
You can only earn a no claims bonus after 12-months. If you cancel your policy partway through (for example because you sold your van) you won’t earn a bonus for that year.
Can I earn a no claims bonus on a business or fleet van?
This will depend on how you’re named on the policy. If you’re specifically named as the main driver, you should be able to earn a no claims bonus as usual.
If the policy is an ‘any driver’ policy and the van is driven by lots of drivers, then it’s unlikely that you’ll be able to build up a no claims bonus.
Can I transfer my no claims discount from my car to a van?
In most cases, yes, you will be able to transfer a no claims bonus earned from driving your car to a van.
Bear in mind that typically, you can only use a no claims bonus on one vehicle at a time. So, while you’ll be able to transfer an NCB from a car to a van, you won’t be able to use the bonus on both vehicles at the same time. That said, there are a few rare exceptions known as NCB mirroring.
A few insurers have started allowing policyholders to ‘mirror’ an existing no claims bonus. This essentially does allow you to use one NCB on a second vehicle but it’s at the insurer’s discretion whether to offer it or not.
There’s also likely to be strict conditions and eligibility criteria to qualify for this too.
What happens to my no claims bonus after a claim?
If you make a claim on your van insurance policy, you’ll lose some of your no claims discount. The more claims you make, the more of the discount you’ll lose.
For instance, if you’ve built up five years of NCB but have an accident and make a claim, your insurer can deduct two years’ worth of NCB. This would leave you with three years’ worth of no claims and lower your discount accordingly (for example you could go from 50% off to 40% off).
Do all claims affect my no claims discount?
No, not all claims will affect your discount. Typically, only claims where you are responsible for causing the accident (an ‘at fault’ claim) will lead to a reduction of your discount.
If you have an accident and insurers can’t decide whether you or the other driver was at fault, they might split the cost of repairs, which will also affect your discount.
The only time your NCB won’t be affected is if the accident can be proven to be someone else’s fault and their insurer covers the cost of damage.
If you’re hit by an uninsured driver, some insurers will let you keep your no claims bonus as it is, while others won’t. With that in mind, it’s always worth checking the small print in your policy documents to see what your insurer’s stance is on this.
Can I protect my no claims discount?
Yes, you can protect your NCB by paying a small fee. Nevertheless, protecting your no claims doesn’t mean your premium won’t increase when you come to renew. Remember—it’s protecting the value of the discount, not the premium.
Can a named driver on a policy earn a no claims bonus?
Usually no, only the main policyholder can earn a no claims bonus. If you’re a named driver, some insurers will take your driving experience into consideration but it’s not a guarantee that you’ll get a lower premium as a result.
How do I find out if I have a no claims discount?
Your existing van insurer will be able to tell you how many years of no claims you have. If you don’t currently have a policy in place, your last insurer should have sent you proof of whatever bonus you had built up. This is usually a letter but could also have been an attachment in an email.
Does a no claims bonus expire?
When you renew your van insurance, your NCB will go with you (whether you choose to renew with the same or a different insurer) so technically it never expires. The only time it ‘expires’ is if you aren’t insured as a main driver for more than two or three years.
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