No-claims bonus
A no-claims bonus is a reduction in the cost of an insurance policy granted to the policy holder for not making a claim in the previous period of cover (typically one or more years).
No-claims bonuses typically apply to car insurance as the number of accidents someone is involved in is a useful measure of the risk to which the insurer is actually exposed.
No-claims bonuses can be protected, meaning a single (or even a few) incidents will not remove a no-claims bonus that has been built up over a number of years – although doing this adds to the cost of a policy.
No-claims bonuses can have a massive impact on the cost of car insurance, removing as much as 70 per cent of the cost of a premium.