A question often raised when thinking about taking out a new motor trade insurance policy, is the benefit financially of protecting your no claims discount. Whilst this may add an additional cost to your overall policy, it could lead to savings in the long run, whether you are an individual driver or run a whole fleet.
Here, we answer some of your questions on how it works, how much you could save and the benefits vs the disadvantages for those that work in the motor trade.
What is a No Claims Discount?
For every year of your vehicle insurance policy that is claim-free, you qualify for a discounted premium the following year. Once you have accrued five years without a claim, insurers will offer you the option of protecting your no claims discount (NCD), also known as a no claims bonus (NCB).
Due to the additional cover, you will pay a slightly higher premium in the short-term, but it ensures you do not lose some of your discount should you need to make a claim later.
How Much Discount Does an NCD Give?
According to the British Insurance Brokers’ Association, a driver who has accrued a year of motor trade insurance without a claim will get a discount of approximately 30 percent off their annual premium. If you build up a no claims bonus of around five years, then you could expect to receive the maximum discount available, however all insurers will differ.
What Happens if I Don’t Have an NCD?
If you have an accident which is deemed to be your fault, even if you are only partially responsible, you are likely to lose some, or all, of your no claims bonus. If the other party is found to be at fault, your no claims should remain in place.
If you haven’t protected your NCD with your insurer, you may find that you lose all five years’ worth of no claims discount, even if you are just claiming for damage that was done to your car whilst parked outside your house. Once lost, you will then need to re-build annually.
How Well is My NCD Protected?
Having NCD protection means you’ll be able to make a claim on your motor trade insurance without losing the no claims discount altogether. This is generally limited to a certain number of claims that a person can make annually, so double check with your insurance broker how many claims you can make on a protected policy. For some it may be multiple, while others more limited.
It’s also essential to read the small print on how many years of no claims you will lose after an accident as this varies between insurers. After just one accident you will probably find that the full five years is protected, but this could drop to a couple of years after two accidents in a 12-month period.
Is it Worth the Extra Cost?
This answer will be different for everyone. If you have accrued a considerable number of years of no claims, then you may find that paying an extra 5 to 10 percent on your annual premium will be worth it considering the savings you can make and for peace of mind.
Can I Move My NCD to Another Insurer?
NCDs are portable and can be transferred to another insurer. You will need to provide proof of your no claims from your current insurer with the driver name, vehicle information and policy dates and history of claims.
Can I Move My NCD From a Private Car to Commercial?
When starting out, it is possible to transfer your NCD from a private car policy to your motor trade insurance policy. There is one disadvantage to this in that generally you will not be able to reverse this back to private should the need arise.
You can also sometimes ‘mirror’ your NCD on another car or van. This means than any NCB you have built up privately on a road risks policy, could be used to give you an introductory discount on your motor trade policy. But, to keep your private policy NCD, you’ll also need to continue both policies, so it may prove expensive.
Can My Discount Be Passed Onto Other Drivers?
No, though you can share a vehicle. However, be cautious, if the other driver were to have an accident and needs to make a claim, it can negatively affect your bonus too.
How Can I Boost My No Claims?
Getting into the motor trade can be expensive, especially if you are a new driver and haven’t accrued any NCD. To attract new customers without any years of NCD, some insurers will offer an introductory no claims which will still give you a discount of around 30 percent in your first year, despite not having any history. To be eligible, you must not make any claims within that 12-month period.
Another option is the accelerated bonus, where you receive the discount after a stipulated number of months instead of one year. Tradex offers the Bonus Booster, which offers those with no bonus a six-month policy to accrue a year’s no claims discount and subsequently use this on a full-term motor trade insurance policy.