No claims bonuses and cheap car insurance

Everyone wants cheap car insurance because it is getting more and more costly to run a car and we have to take all the savings we can get. Despite this, worrying statistics show that not all of us are taking advantage of the low cost motor insurance quotes out there and many people are paying over the odds as a result.

Perhaps the increasingly complicated terminology used by many motor insurance firms is the reason that so many people turn down the chance of cheap car insurance.

In order to help more people get their dream motor insurance rates, the experts at duck2water Car Insurance Services have decided to pin down one of the most elusive terms in the world of car insurance: the no claims bonus.

What is a no claims bonus?
A no claims bonus, also known as a no claims discount, can be defined as:

"The amount by which a renewal premium is reduced if the insured has not made a claim under the insurance policy for one or more consecutive preceding years."

Basically, it means that if you took out a motor insurance policy one year ago and haven't needed to claim on it, you will now be the proud owner of one year's no claims bonus. If you go for two years without claiming, you will get two year's no claims bonus, which means an even cheaper car insurance premium.

Although every motor insurance firm recognises no claims bonuses, there is no set discount that a no claims bonus will equate to. However, there are some generally accepted reductions:

Period of insurance Discount

• 1 year 30%
• 2 years 40%
• 3 years 50%
• 4 years 60%

As there is no exact discount that a no claims bonus should earn, you may find that some cheap car insurance companies will give a greater discount than others. If you shop around, you will find that discovering discrepancies such as this one can potentially save you a lot of money.

Why does it mean cheap car insurance?
The reason that a no claims bonus means that you will get such a substantial discount on your motor insurance premium is that it shows that you have a good driving record. A cheap car insurance firm can then see you haven't needed to claim on your motor insurance recently and are likely to give you a low cost premium.

It is thus very important to look after your no claims bonus and not to make a claim on your cheap car insurance policy unnecessarily. For example, say you have damaged your car whilst parking and it has minor damage that would cost £150 to repair. Although you may be able to claim on your motor insurance policy, you may find it will turn out cheaper to pay for the repairs and leave your no claims bonus intact.

What happens to it if I need to make a claim?
However, if you do need to make a claim, don't worry about losing your hard-earned no claims bonus altogether. Most motor insurance firms use a 'step-back' process where you will lose one or two years' no claims bonus rather than the whole thing.

For example, if you have four years' no claims bonus and make a claim on your cheap car insurance policy, you should still be able to get a motor insurance quote with a 40% discount.

Some car insurance companies have started offering drivers a protected no claims bonus in the last few years. Although protecting your no claims bonus will put up the cost of your cheap car insurance premium a bit, you won't lose your discount if you need to make a claim.

However, it is important to remember that although your discount will be protected, future motor insurance firms will still be able to see that you have recently claimed on your policy and may put up your premium accordingly.

Really cheap car insurance quotes with duck2water
While a no claims bonus will always give you a discount on your motor insurance, there are many other factors which can affect how much you will pay for your car insurance.

One such factor is your choice of motor insurance company. Some insurers spend thousands of pounds on expensive advertising and pass these costs onto their customers. In contrast, duck2water is proud to not do any expensive TV or radio advertising, meaning that we can give our customers really cheap car insurance.

Nobody likes messing around with a badly-designed quotation engine waiting for their online motor insurance quote. As we know this, we have designed ours so that getting a quote with duck2water is extremely straightforward and takes only a couple of minutes.

If you're after the chance of a cheap car insurance quote, you're in luck - you've found one. Just click the button below.

For more information, please see:

• Why choose duck2water?
• How to buy online
• Breakdown cover
• Glossary
• Customer testimonials

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