Save Money With No Claims Bonuses

No Claims BonusesAsk any auto insurance agent or customer service representative and they'll tell you that their favorite customers are those who never file claims. Such customers are so well loved by insurers, in fact, that many companies offer a "no claims" bonus as an incentive to retain their business.

What is a no claims bonus? In most cases it's a credit toward your car insurance premium for not submitting claims on your policy. The bonuses are often cumulative, and some can actually reduce the cost of your insurance by as much as sixty percent over a five-year period.

These bonuses work by reducing the cost of your auto insurance by a certain percentage for each year that passes without a claim, so for one year, you may not get much of a break, but if you stay claim-free for several years in a row, those percentages can really add-up, which makes your premium go down, down, down.

It's important to remember that not every insurer offers no claims bonuses, and that those which do offer bonuses for staying claim-free all have their own discount policy, so always check with your insurer before assuming that there will be a big savings.

It's also important to remember that no claims bonuses are not no fault bonuses. That means any claim you file, even if it's for an accident that wasn't your fault, can cause you to lose the discounts you've accrued.

One way to avoid losing your no claims bonus, once you have earned it, is to purchase additional coverage called a "protected no claims bonus," which generally allows you to keep the bonuses you've earned even if a claim is filed, but is usually only good for one claim. Again, every insurance company has different terms, so check with your agent at policy inception.

A no claims bonus is not necessarily the easiest way to save money on auto insurance, but earning them can save you a significant amount of money on your premium.

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