No Claims Bonus Protection Explained

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A no-claims bonus is a discount that you can receive on your motor insurance dependent on the number of years driving you have built up without making a claim on your policy. While the amount that your no claims bonus is worth will vary across different insurers, have a no-claims history of five years or more will likely net you a significant discount.

Once you build up several years of claims free driving, your no claims bonus will help you get a noticeable reduction on your premiums and because of this many drivers will want to protect their no claims bonus. Thankfully there are two options which allow you to do just this, Full No Claims Bonus Protection and Step Back Bonus Protection.

What is Full No Claims Bonus Protection?

While Full No Claims Bonus Protection is the most expensive option when it comes to protection your no claims history, it also offers the greatest level of protection. In the event that a claim is made against your insurance you won’t lose any of your years of no claims driving, meaning the discount you receive is fully protected.

However, before taking out Full No Claims Bonus Protection it can be worth checking with your insurer for any exceptions or limitations to the protection. For example the protection may only apply where a claim made against you is under a certain financial amount or your protection may be not apply if multiple claims are made against you in a specific time-frame.

What is Step Back Bonus Protection?

Step Back Bonus Protection usually costs less than Full No Claims Protection, but also offers you a lower level of cover. In the event that a claim is made against your insurance then you will lose a part of your no claims bonus. For example, if you have five years of claims free driving before the claim is made, this could be stepped back to two years meaning you won’t fully lose your discount but will see it reduced.

Do I have to take out protection on my No Claims Bonus?

Protection your no claims bonus with either full or step back promotion will come at a cost. If you’re trying to minimise the cost of insurance you can choose to have no protection on your no claims bonus. While this will lead to a slight reduction on your premiums, if you are involved in an incident and forced to make a claim you’ll lose whatever no claims bonus you have built up and could find yourself paying significantly more for cover at the time of your next renewal.

When getting a quote for car insurance it’s important that you’re honest with your insurer about the number of years no claims driving you have built up. While it may be tempting to exaggerate the number of years of claims free driving you have in the hopes of getting a bigger discount, your insurer will require you to provide proof of your no claims bonus from your previous insurer in order for you to be covered.