When it comes to car insurance, one term you often hear is "no-claim discount." But what does it mean, and how does it work? Let’s break it down.
A no-claim discount (NCD) is a reward from your insurer for driving safely and not claiming on your car insurance. The longer you go without filing a claim, the bigger your discount. It’s a way of saying “thank you” for being a low-risk customer.
How does It work?
Each year that you don’t make a claim, you earn a no-claim"bonus." This increases your discount for the following year. For example, if you’ve gone five years without making a claim, you’ll likely receive a higher discount than someone who hasn’t claimed for just two years.
However, if you make a claim, you might lose part of your bonus. Some insurers offer “no-claim protection,” which lets you keep your discount even if you claim once or twice.
Why is it important?
A no-claim discount can save you a lot of money. Insurance premiums can be expensive, but with a no-claim discount, you could pay significantly less.This is why many drivers try to avoid small claims. Sometimes it’s cheaper to cover minor damages yourself rather than risk losing your discount.
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