An automobile insurance policy comes with many discounts including one for not having to make any claims on a policy. A no claims discount can decrease the cost of a policy, can be applied in many ways and can as an incentive to an insured. A no claims discount is a good way to offer a discount that otherwise would not be available.
A no claims discount can significantly decrease the cost of the automobile insurance premium being paid. A no claims discount works by providing up to a 20 percent discount on the policy for the first year a driver has made no claims. The discount can raise as much as 10 percent per year up to five years for a maximum discount of 60 percent. This discount is applied differently depending on the insurer and if they even offer the discount. Saving money on automobile insurance can be done in a variety of ways using discounts. A no-claims discount will benefit those drivers who have not made any claims on their automobile policy.
A no claims discount can be applied in many ways depending on how an insurer decides to calculate the discount. Many times a driver may have had four or five years of no-claims and then they had to file a single claim. Usually an insurer will “step back” the discount by two years. This means that you do not accrue the year of no claims you were building towards and you lose two years of no claims you have already built. If a car is ever stolen or damaged by a storm an insurer may not change the amount of the discount. A no claim discount is generally calculated at the time the policy is written and then during each subsequent renewal.
A no claims discount can sometimes have the effect of being an incentive for an insured with an automobile policy. This is because an insured may be inclined to pay better attention when driving in order to avoid getting into an accident. This can also include keeping a vehicle in a garage to shelter it from the weather. An insurer can also protect their no claims discount by paying for any damages to their vehicle that they can afford. This is especially true if the cost of the repair work is close to the amount of the deductible.
A no claims discount is a good way to offer a discount that may not otherwise be available to someone looking for auto insurance. A drivers history may include violations that can increase the cost of an automobile policy. However, is none of the violations on the driving history leads to a claim a no claim discount can usually be applied.