No-claim Discount

A no-claim discount, which is also called a no-claim bonus, reduces the premium that a motorist pays.  It is applied to an insurance policy, usually over four or five years, where a claim on the policy has not been made, and thus is an incentive for motorists to drive safely.  The discount, which can help to reduce insurance costs by up to 75 per cent, can usually be transferred to another insurer without any penalty.

If a motorist does make a claim and the insurer cannot recover costs from someone else, then part or all of the discount may be lost.  However, many insurance companies will permit a motorist to pay an additional fee for the no-claim discount to be protected, or they may slightly reduce the scale of the discount.  It is up to the motorist to decide how valuable that additional protection is likely to be.  By paying an additional fee it is possible to keep a no-claim discount but insurance companies have different practices in regard to this and it is important to check the exact terms of the policy.

Policy Excess

A motorist may choose to pay an additional amount if a claim is made, and this will be agreed with the insurer at the outset of the policy.  The amount varies and can be negotiated, but the higher the excess amount agreed the lower the overall premium will be.  Inexperienced drivers will usually have to pay a compulsory excess.