What Is a No-Claims Bonus?

In insurance, a no-claims bonus is a benefit extended to those who have not made any claims in the previous year. It is mainly used in the Houston auto insurance industry to mean a reduction in the amount of premiums paid in the following year. Since you are rewarded for each year you do not make a claim, you can enjoy substantial savings on your yearly insurance premiums.

Transfer and Duration of Coverage

Most insurers will allow you to transfer your no-claims bonus from one policy to another. They just need to make sure that the last policy you had expired within a specific number of years, which for most firms are two or three years. This is not an industry-wide regulation, however, because some firms may not recognize your bonus if you have had a break in your coverage. On the other hand, your no-claims bonus will not expire as long as your coverage is intact and you do not make any claims. The percentage of the bonus you lose when you do make a claim depends on your insurance provider.

Protected No-claims Bonus

Most insurance companies have a program called protected no-claims bonus. This program allows you to hold a given number of claims without losing your no-claims bonus. You should note, however, that this protection does not preclude you from paying relatively higher premiums. If you are assessed as a more likely to have more claims, your premiums may rise accordingly. In this case, you only stand to benefit marginally from your no-claims bonus status. Thus, the protected no-claims bonus stands to save you some money even if you do make a claim.

 

Increasing Your Chances for the Bonus

To enjoy your no-claims bonus, you need to do everything in your power to avoid situations that may entail you making a claim. Some of the measures you need to make include:

 

Concentrate while driving

This may sound like a relatively simple advice but the reality is that many drivers get distracted whilst on the road. In fact, you can easily be distracted even while using some of the car technology meant to help you such as satellite navigation.

 

Maintain Your Car

Ensure that your car is well maintained and serviced regularly. The tires should have adequate threads and should be inflated properly, and the windscreen washers should be functional.

 

Eligible Drivers

Most insurers will only allow a car's owner to benefit from the no-claims bonus, but there are exceptions. A few insurance companies will allow a few other named drivers to enjoy no-claims discounts on your car. This is a great advantage for these drivers, especially when they move to their own policies. You should also note that a no-claims bonus is limited to a single vehicle, and if you buy an additional one, you should not expect the bonus to cover them both.


Call ABM Insurance at 800-362-2809 to get your auto insurance quote today!