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When we purchase car insurance, it can be quite daunting with all the extra add-ons that are potentially provided with the policy. No claims discounts can be one of those niggling extras that can be a little unclear. Years ago, the thought of protecting no claims discounts seemed absurd. If motorists had an accident and had to make an insurance claim, they automatically lost some or all of their no claims discount.

The benefits of no claims discount

A no claims discount is like a reward given by the insurance company for being a very good driver. These incentives are given for not having an accident, neither being a victim of theft or vehicle damage and therefore have not made a claim. In other words, you have a good track record usually built up over a period of years, and can be trusted by the insurance company. Insurance companies love motorists who drive carefully because they do not have to make pay outs. They simply keep collecting the policy money each year!

The more careful motorists drive around the more their no-claims discount will rise in the future. Generally, motorists see their no claims increase by one point annually, usually to a maximum of five years. Motorists who are able to build up their no claims over time receive massive car insurance discounts. These discounts can be in the region of sixty to seventy per cent. Obviously, these kinds of discounts substantially help all motorists reduce their premiums and bank balances; so therefore the no claims discount is quite a desirable asset you want to protect.

Protecting your no-claims discount

You may be one of these motorists who have driven for thirty years very carefully. You have not had a car accident, suffered no theft or damages and have never had to make an insurance claim. Imagine, one afternoon you suffered an unfortunate accident; suddenly you realise, you now need to make an insurance claim. After all those years of careful driving and having built up your discounts, you now face the possibility of losing it all regardless of thirty years of excellent motoring. The effect of this claim will without a doubt increase your insurance policy by approximately seventy per cent.

Protecting your no-claims discount is also extremely useful. In the unfortunate event of you having an accident and then making a claim, your no-claims are fully protected. This means you would not lose any no claims bonuses and your discounts will continue as normal. Your next insurance premium would therefore not be affected.

For motorists who think they can drive around outrageously, watch out! The maximum amount of claims you can make in a year is one. Sometimes, a company might allow a maximum of 2 claims depending on which one you use.

The cost of protecting your no claims is approximately £23. If you stay claim free, then you will effectively lose that £23. On the other hand, should you make a claim then you will have saved yourself a great deal of money at your next renewal date.

Protecting and saving your no-claims discounts is a valuable commodity. However, should thirty years pass by without paying a claim, then effectively you would lose approximately £690 for the total period.

TIP: The key to budgeting this extra cost is to search for a competitive insurance to reduce the overall yearly cost that would then swallow this fee up.

Have you got any no claims stories? Please share them online below.