Car insurance costs can be cut with a key step but one simple mistake could set drivers back years
Drivers could be facing higher insurance costs because of a simple mistake. Motorists usually understand that avoiding claims helps cut premiums, but many remain unaware of just how much cash they could be saving because they don’t know how their No Claims Discount (NCD) operates.
Gary McClarty, Director at its4women , an Irish-owned online insurance provider with more than 130,000 policyholders, says it is a common problem.
He says: “We speak to drivers who’ve accidentally lost their No Claims Discount when switching insurers. These are savings that take years to build up.”
Possible savings can be much more than people realise, reports the Express. With several claim-free years, motorists can cut their premiums by up to 70%, potentially, saving hundreds of pounds a year.
Gary said: “One of the most common mistakes I encounter is drivers switching insurance providers without properly transferring their No Claims Discount. They often focus on securing the best quote, make the switch, but then overlook the crucial step of requesting proof of their claim-free history from their previous insurer. As a result, they can find themselves starting over with no discount at all.”
He has now set out how people can safeguard these discounts so that they can retain more cash in their pockets.
What is a no claims discount?
A No Claims Discount gives motorists reduced car insurance premiums for each consecutive year they avoid making a claim. Insurance firms view claim-free motorists as lower risk, with potential discounts reaching up to 70%.
“While initial savings may appear modest, they can accumulate significantly over time,” explains the expert. “After just one claim free year, policyholders may benefit from discounts of 10-15%. However, maintaining a clean record for five consecutive years could result in premium reductions of up to 60-70%.”
To show how much you can save take an annual premium of £1,000. With a maximum No Claims Discount applied, this could be cut to just £300 resulting in a yearly saving of £700. Over the course of a decade, that amounts to £7,000 in total savings.
How to safeguard your NCD
Safeguarding your No Claims Discount (NCD) is an important way to preserve long-term savings on your car insurance premiums. There are two main types of NCD protection available: Full No Claims Bonus Protection and Step-Back Bonus Protection.
Each option provides distinct benefits, enabling you to retain some or all of your discount even after making a claim-helping to soften the financial blow and maintain lower premiums over time. Complete No Claims Discount Protection enables policyholders to submit one or two claims whilst maintaining their full discount.
“It’s essentially insurance for your insurance,” observes the expert. “Whilst it requires a modest additional premium, the potential savings can be substantial if an incident occurs.”
Step-Back Bonus Protection provides a different strategy from complete protection. Instead of forfeiting your entire No Claims Discount following a claim, your discount is merely reduced by one or two tiers. This method enables you to preserve a substantial portion of your savings, rather than beginning again from the start, providing a more gradual adjustment to your premium.
How to transfer your discount
Moving your No Claims Discount (NCD) when changing insurance providers is often straightforward. However, it’s essential to handle the transition carefully to prevent accidentally resetting your NCD to zero.
“The key is timing and paperwork. You must request proof of your No Claims Discount from your previous insurer and ensure your new policy begins immediately after the old one ends so there are no gaps in coverage.”
Other ways to save your discount
In some circumstances, paying minor repair expenses from your own pocket can be more financially visable than submitting a claim. “If you have a minor scrape that costs £200 to fix, but losing your No Claims Discount would increase next year’s premium by £500, the choice is obvious,” explains Gary.
Also, named drivers could potentially accumulate an Introductory No Claims Discount, contingent on their history of claim-free driving.
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