No-Claims Discounts Explained

• A "no-claims discount" (or, as it is sometimes called, a "no-claims bonus") is a (sometimes very significant) reduction in your car insurance premium based on the number of years you have NOT made any insurance claims for (or had any made against you).
• A "full" no-claims discount means you have had no claims in the last 5 years. This is the maximum number of years allowed; even if you have had no claims for much longer than that, only the last 5 years will apply. The exact percentage discount that will be applied to your premium varies according to insurance company. Some very careful drivers have been rewarded with no-claims discount of as much as 71%, meaning that the premium they pay is 71% less than it would be if they has no such discount at all.
• Your discount can be reduced, or be lost altogether, if you make an insurance claim, or if somebody makes a (successful) claim against you, even if you weren't at fault. (However, in that instance, your discount may be restored in part, or in full, if your insurer can recover the cost of the claim for the other person's insurance company).
• It is possible to protect your no-claims discount, either in part, or in full, for a (usually) modest extra charge. Partial protection, or “step-back” protection, means that, if your current discount is 50%, and you make a claim, that could be “stepped back” to 30%. Instead of losing all of you discount, you've only lost 20%. Some insurers will step back your discount after every claim you make, or have made against you. Others will only step back the discount after a certain number of claims have accumulated. Before making any claim, it would be prudent to check how much your discount would fall afterwards – if the claim in question is small, it could work out cheaper to pay for the damage yourself.
• Full protection of you discount generally means you can make any amount of claims for fire or theft, 2 claims of less than 2 or 3 thousand Euros within 3 years, and one claim for a larger amount within 3 years...all without losing your discount at all. However, the specifics vary among different insurers, so make sure you check the details of you policy before making any claims. This type of protection is more expensive than “step back” protection.
• You can transfer you no-claim discount when you change from one insurance company to another. Usually, you new insurer will take care of any paperwork involved. However, since different insurers offer different no-claims discount protection terms, you may not be able to transfer you discount protection from one company to another. For that reason, even if your discount was protected against a claim made while you were with you previous insurer, your new insurance company may not recognise that protection, and will calculate your “new” period of no-claims from the date of that claim. Even if a new insurer can offer a lower premium, this “catch” in the system can still make it more expensive to switch.