What is a no-claims discount?
If you have auto insurance, you've probably heard of the term "no claim discount. But what exactly is no claim? And how do you get this discount? Simply put, it is the discount on your auto insurance premium the moment you drive claim-free. Literally, it means no claim. You did not make a claim on your insurance. The insurance company did not pay a claim for you. Your insurance company rewards you for the number of claim-free years. If you did not file a claim with your insurance company, the insurance company also does not have to incur any costs for you. This way, you get more no-claim discount. However, when you do claim, in many cases you will pay more.
What does no-claim discount mean?
No-claim discount means that you get a discount on the premium of your car insurance if you do not claim any damage from the insurer. For every year that you do not make any claims on your insurer, you get 1 claim-free year. The more claim-free years you have, the more no-claim discount you will get. In this way the insurer rewards you for damage free driving.
How does the no-claim discount work?
Insurers determine the no-claim discount on the basis of the bonus-malus ladder. This is a table that shows the number of claim-free years with the corresponding discount that you receive on your premium. The more claim-free years, the higher you are on the ladder and the more no-claim discount you receive. Each insurer has its own no-claim discount scheme.
What does no-claim discount mean?
No-claim discount means that you get a discount on the premium of your car insurance if you do not claim any damage from the insurer. No claim = no damage claim. It is always wise to check first whether it is better to claim or to pay for the damage yourself. For each claim you lose 5 claim-free years, regardless of the amount of the claim. Therefore it can be more profitable to pay for the damage yourself than to claim it on your car insurance. Often the premium increase that arises when you make a claim is higher than the total amount of the claim.
What is the maximum no-claim discount?
The maximum no-claim discount differs per insurer. This depends on the no-claim discount ladder used by the insurer. Each insurer may use its own no-claim discount ladder. The maximum no-claim discount can be as high as 80%. However, finding an insurance policy with a no-claim discount of 80% does not mean it is the cheapest car insurance. One car insurance policy with a high 80% no-claim discount can still be more expensive than one with a 70% discount. It is therefore important to calculate how much premium you will pay every month. You can do this easily by comparing car insurances.
What is the no-claims discount table?
The no-claim discount table is also called the bonus-malus ladder. A no-claim discount ladder is a table that insurers use to determine the no-claim discount of your car insurance. The discount you receive is determined on the basis of the number of no-claim years you have. The higher you are on the ladder, the more no-claim discount you will receive. Each insurer has its own bonus malus arrangement. Therefore there can be differences in discount between the different insurers. The bonus malus scheme of your insurer can be found in the policy conditions of your car insurance.
Car insurance no-claims discount relapse?
The more claim-free years, the higher the no-claim discount on your car insurance. But what if you do damage with your car? Suppose you hit a pole with your car or you drive into another car. Because of this you will fall back in your no-claim discount when you are responsible for the damage you caused and the insurance company has to pay out. It does not matter to the insurance company how big or small the car damage is. The moment you fall back on the ladder, you will receive less no-claim discount and the premium of your car insurance will therefore be higher.
What is covered by the no claim discount?
If you are not responsible for the damage, you will not fall back on the no-claims bonus ladder. For example in case of theft of your car, window damage or fire. Also damage caused by a collision with a wild animal does not affect the no-claims bonus ladder. Damage caused by yourself, however, does influence your no-claim discount. In some cases it is worth considering paying for the damage to your vehicle caused by your own actions. It may be cheaper to pay for the damage yourself and thus maintain your no-claim discount.
No-claim and a second family car can I apply that?
When you have bought a second family car, you may wonder whether you can apply the no-claim discount and claim-free years of your first car to your second car. Unfortunately, this is not how insurers work. Usually the second car has a different regular driver with a different driving experience. Claim-free years are therefore only applicable to one car at a time. You can therefore not automatically transfer the no-claim discount to the second car.
Insurers often have a so-called second family car scheme. This means that if you place a second car with the same insurer, you will benefit from the same discount. You cannot take the claim-free years with you; you will build them up separately for the second car. In most cases, there are a number of conditions attached to this second family car scheme. Some examples are:
- Minimum age of driver; age should be at least 24 years for both drivers.
- Living at the same address; both partners have to live at the same address (resident children excluded).
- Maximum catalogue value; the second family car has a maximum catalogue value of €75,000, including VAT.
- Negative number of claim-free years; if one of the policyholders has a negative number of claim-free years, the second family car scheme is not possible.
- No fault damage;no fault damage must have been reported on the insurance policies of both cars during a period of 12 months.
- Private purposes; both vehicles are passenger cars, and are only used for private purposes.
No claim protector; what is that?
A number of insurers allow you to get additional insurance on your no claim. This is called the no claim protector. This will keep you from dropping on the bonus malus ladder if you claim damage.
Claim-free years transferable since 1-1-2022
Since 1 January 2022, claim-free years are transferable in certain situations. In case of death for example, they can be transferred to the surviving partner. Also for lease drivers and drivers who have lived abroad for years, it is now possible to transfer the claim-free years. This way, they do not lose their accumulated claim-free years. In our blogpost you can read more about this new regulation.
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