Car insurance premiums decrease by £745, a drop of almost a third (32%), after one year of no claims discount, according to Compare the Market.
When drivers come to renew their policy, those who have not made a claim on their car insurance can typically receive a no claims discount, or no claims bonus, from a number of insurance providers, with the discount rising the longer that you drive without making a claim.
Premiums also fall significantly in the second year of no claims, by £354 (23%), and in the third year, by £219 (18%). Motorists who do not make claims on their car insurance over an extended period could stand to make significant savings.
For instance, the price difference in insurance premiums for drivers without a no claims discount compared to those with ten years of no claims is £1,772 on average. There are many factors that influence the pricing of a premium including the driver’s age and address, the make and model of the car and its annual mileage. Having a no claims discount, however, could make an additional difference to the price of your insurance premium.
The savings that could be made from having a no claims discount may be particularly important for younger drivers, many of whom are concerned about rising insurance premiums. Recent research from Compare the Market revealed that more than seven in ten (73%) young drivers are worried about how they will afford their car insurance policy and nearly one in four (24%) have struggled to afford their premium.
Rising insurance premiums are affecting motorists across the board, including those who have not made a recent claim on their car insurance. Compare the Market’s research revealed that car insurance premiums have increased by £546 (54%) year-on-year for drivers with one year of no claims, £441 (58%) for those with two years, and £342 (53%) for motorists with three years.
Similarly, drivers with ten years of no claims have seen their premiums jump by £186 (54%) on average. The significant rise in the cost of car insurance may in part be due to a rise in the cost of claims for insurers. High inflation rates will have likely impacted many areas of the motor repair industry, including the cost of spare parts, energy, and hiring specialist mechanics.
In addition to the savings that could be made by having a no claims discount, it is important for drivers to consider ways in which they could be making savings on their car insurance. Comparing prices online is one of the best ways for drivers to find the right deal at a suitable price for them. Through Compare the Market, motorists could save up to £578 on their car insurance.
Drivers can usually take their no claims discount with them when switching insurer, as long as this is confirmed with their new provider and written proof of their existing no claims discount is given. Drivers who need to make a claim should contact their insurance providers’ claims team with their insurance documents to hand and provide details of what happened as clearly and as accurately as possible. While you don’t always have to make a claim, drivers must let their insurance provider know if they are involved in an accident.
Julie Daniels, motor insurance expert at Compare the Market, said, “The easiest way to check your no claims discount policy is to look at the documentation provided by your insurer, which may have been sent in the post or might be available online.
“If you cannot find the details in your renewal notice or other paperwork, you may wish to get in touch with your provider directly. While drivers could certainly make significant savings through a no claims discount, insurance premiums remain high even for motorists with no recent claims. It is important that any driver who is looking to save money on their car insurance compares deals and prices online ahead of their policy renewal.”