Statistics in the automotive insurance industry assert that 9 of every 10 motorists will be involved in at least one accident in their lifetime. Most of those accidents will involve two or more vehicles where fault may lie with more than one motorist. One third of those motorists refuse to file an insurance claim for varying reasons with the biggest fear being that of losing their no-claims bonus.
A no-claims bonus is a discount that an insured driver receives each year that insurance is purchased and no claim is made on the policy. This can amount to a substantial discount off the cost of annual insurance premiums for drivers that are accident and claim free for 5 or more consecutive years.
Typically the bonus starts at approximately 15% after 1 year and climbs to 60% or more after 6 or more claim free years. A claim in this instance is any payment made under the policy whether it is to the insured or a third party. Non-fault claims that are covered by the ‘knock for knock’ agreement do not count as a claim under this scheme. Also, most consumers do not understand that claims reported to the insurance company but closed without cash outlay do not affect the no claims bonus.
Insured individuals in the UK are willing to relinquish from £235-£1,100 out of their own pockets to repair the damages due to collision rather than file a claim with their insurance company, even if the accident was not their own fault. The fear of losing the no-bonus claim along with a ‘black’ mark on their insurance record leaves them with a temporary, but unnecessary lack of funds. There are still others who not only do not report a claim to their insurance company, but do not repair the damages and continue to drive with the collision damage intact.
What most consumers are unaware of is that a protection clause is available for purchase. Insured individuals can apply to have a ‘protected no-claims bonus’, so that in the event of an accident, the consumer does not lose the no-claims bonus. Most insurance companies offer the “protected no-claims bonus” terms in their policies but it is more expensive. In most cases, it is worthwhile tp pay it. For example, a 40% no-claims bonus on a motor insurance policy costing £2,000 before discount, is worth £800 per year in savings. So the small additional premium amount of £50, for example, is well worth the right to protect the no-claims” bonus and still be in a position to make a claim when an accident occurs.