What is a no claims bonus?

A no claims bonus is basically a reward given to drivers for not getting into an accident or claiming from their insurance policy during the policy period – usually this is a period of a year. Every year that you do not make a claim you are rewarded with a no claims bonus which will then translate into a lower insurance premium the following year. While you will not normally receive actual cash back, you will save money on the following year’s premium. By not claiming for a number of years (say two or three) you can end up saving a substantial amount on car insurance premiums, and who doesn’t want to save money these days? The cost of living is continually going up but it often feels as though our salaries stay the same.

So what can you do to ensure that you get as many no claims bonuses as possible? South African roads are notoriously bad – as much as 60% of our roads are in a bad condition and other drivers can be a menace on the road… Firstly, you improve your chances of retaining your no claims bonus by always driving as cautiously as possible. Be alert when you are on the road and be aware of potential accidents waiting to happen like animals in the road, potholes and roadblocks.

If you have to travel in areas where traffic lights are down or on a piece of road that is prone to petty crime, always be vigilant and you’re your doors locked. The next thing that can help retain your no claims bonus is simply being aware of the fact that other drivers might not have your best interests at heart means that you will be more cautious, thereby decreasing your chances of being in a situation where you need to claim from your insurance.

Another way of improving your chances of keeping your no claims bonus is to regularly check the roadworthiness of your car. By having a car that is always in a roadworthy condition, you decrease the chance of an accident occurring even more – no risk of hitting a person or object due to faulty breaks or tyres that are too smooth.   No claims bonuses exist to provide an additional incentive to drivers to drive on the road with caution and decrease the amount of claims that they make on their car insurance policies. It can be very expensive for an insurance company to keep paying out insurance claims, so it makes sense for an insurance company to increase premiums each time you claim from your car insurance. If you want to keep your insurance premiums as low as possible, then you should look for a car insurance policy that has a no claims bonus so that you can decrease your insurance premiums annually.

What if something does happen to your car and you are involved in an accident? Accidents happen and this is why you have insurance after all. If you are involved in a large accident and the costs of repairing the damage are large, then by all means, claim from your insurance. If, however, the claim is a small amount that you would be able to cover by yourself, it might be worth thinking it through and possibly paying for the damage yourself and retaining your no claims bonus.