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A no claims bonus is a discount scheme that rewards customers who don't submit claims on their car insurance. After a year, if you have not submitted a claim to your insurance provider, you should be eligible for a no claim bonus or discount and with each year this discount should increase as you build up you length of no claims.

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A common amount is usually a 30% reduction from your starting policy and can often possibly extended to 60% over time.

However your no claims bonus will be reduced or even void (depending on the severity of the claim) if you do make a claim. Rather than disallowing it, it's common for insurers to reduce it by 2 years to keep their customers happy.

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The case with many smaller accidents is that the owner will pay for the cost of the repair themselves in order to protect their no claims, as in many cases the cost of the repair will acctually be less than the discount you could lose if a claim is submitted.

Some insurers do offer protection for your no claims bonus within the cost of the policy. This is done when purchasing your policy from your insurers, for a small extra cost to the premium you can pay to help protect your no claims bonus.

This is generally done in one of two ways:

Complete protected No Claims Bonus - for an extra fee, the customers no claims bonus is protected and any claims made that year will have no effect on the drivers no claims bonus.

Partly Protected No Claims Bonus - This is where the motor insurance company, for an extra fee, will protect your amount of no claims bonus against up to two accidents for the length of that policy.

This is a good option for many drivers, however the extra premiums young drivers would have to pay is still substantial and not really worthwhile.

Building your no claims bonus is the most effective way of making sure that your insurance premiums will decrease in cost over time and this is especially prevelent with young drivers.

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