Car Insurance Discounts
No-one likes to pay more for their car insurance than they
need and below are some of the many legitimate ways that can be used to
reduce the premium. Please note that some of these ways involve
restricting the cover of your policy whereas others are based on
declarations you may make when obtaining a quotation. If you do make any
of the declarations it is up to you to ensure that you qualify and
maintain qualification. Failure to do so could prejudice a claim.
No Claims Bonus
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The most common and the benefit worth the most to the
consumer.
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Virtually all policies reward careful drivers with a
discount from the policy that takes into account the number of years
driving claim-free.
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Most importantly, insurers recognise this discount
when quoting for customers for the first time.
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No claims bonus is given in Years
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'4' years is NOT the maximum no claims bonus allowed -
some insurers go up to '9' years
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Most insurers reduce no claims bonus by 2 years for
each fault claim or to '2' or '3' years if they have long scales.
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No claims bonus is normally accepted up to 2 years
from the date of expiry providing no insurance has been held in the
meantime but some companies are more restrictive whilst a couple allow
bonus for 3 years.
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Insurers will require proof of this bonus - this is
usually the last renewal notice issued by the insurer, which must be
provided to the customer.
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If coming to this country from abroad you should check
if a foreign no claims bonus is acceptable
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No claims bonus proof can normally be transferred to a
motorcycle or commercial vehicle policy but not vice versa
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Simple mathematics shows that having a claim with an
insurer with a large maximum no claims bonus will result in a much
higher premium the following year.
Protected No Claims Bonus
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Usually need 4 or more years no claims bonus to
qualify (some companies offer at a lower level)
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Promises that the no claims discount will not be lost
if only a certain number (usually 2) claims occur in a stated (usually
5 years) period
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Companies vary their terms if 3 claims occur. These
range from removing the protection, going onto a step-back scale, or
loss of bonus completely. Suggest reading your policy or speaking to
us about it.
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You have to pay a premium: Usually either more money
or accepting a higher excess.
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Insurance companies tend to offer policies such that
if you make one claim in 3 years you are about in the same position
whether or not you took the protected bonus.
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Some companies offer a guaranteed bonus - irrespective
of claims e.g. NIG
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Irrespective of the above, insurers always retain the
right to amend premiums due to adverse claims experience
Introductory Bonus
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Designed to help reduce the initial insurance costs of
someone who may have driving experience but no previous insurance in
their own name.
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Requirements vary: Usually drivers have to be over 25,
no claims in the last 12 months, only one minor conviction and have
held a full licence - usually for at least a year.
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Traditionally the discount given was the equivalent of
one year no claims bonus
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If you apply for an introductory no claims bonus you
can expect to have to provide a copy of your licence.
Second Car Bonus
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Designed for the his/ hers scenario when the wife buys
a car for the first time so that there are now two cars in the family,
both drivers have a proven driving history.
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Discounts can be equivalent to the no claims bonus on
the first vehicle.
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Frequently the policy must be in the wife's name or
the wife must be the main user.
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Will NOT be given if there are additional drivers -
especially 17 year-old sons!
Company Car Bonus
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Designed for the ex company-car driver who decides to
forgo the company car - due to a change of job or for tax reasons
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A discount equivalent to the years claim free riving
for the company will be given.
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Usually the driver must have had the use of a company
CAR (not van) for sole use (i.e. not a pool car), been allowed to
drive for pleasure and no longer have use of the vehicle.
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Almost certainly young/ inexperienced drivers will not
be allowed to claim the discount
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A letter from the employers and a copy driving licence
will be needed
Pass Plus Discount
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The Pass Plus is a course of driving tuition offered
to young drivers once they have passed their driving test.
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It consists of a sequence of driving in unfamiliar
situations - urban, motorway, night etc.
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The hope is that being given this experience will
reduce claims amongst first-time drivers.
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The course costs about £100.00 so as an incentive
insurance companies were encouraged to give discounts exceeding this
to people who took the pass-plus course.
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The normal discount is about 25 - 30% which is a
substantial amount considering premium for the teens can be well in
excess of £1000
Driving Discounts
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Insurance companies give discounts if driving can be
restricted. In order of increasing discount these are usually:
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Exclude drivers under 21
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Exclude drivers under 25
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Exclude drivers under 30
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Exclude drivers under 35
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Name the drivers
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Restrict driving to insured and common law partner
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Restrict driving to insured and legally married
partner
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Restrict driving to insured only
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If you opt to exclude drivers by age the certificate
of motor insurance will not state the age limit.
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Please note that even if you do not restrict the
drivers you still have an obligation to disclose those drivers who
will drive the vehicle on a regular basis
Use Discounts
Mileage Discounts
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Discounts may be given if the vehicle is not used for
many miles a year.
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Although discounts may be given for less than 12000
miles, the best discounts are for less than 3000
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Before entering incorrect annual mileages on the
proposal form, however please note that the mileage at inception will
be asked for, and at the claim and if the annual mileage exceeded an
additional excess or reduction in cover to third party only may occur.
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(As an aside Norwich Union are investigating the use
of a tracker system to analyse mileage and base the premium on where
the vehicle has been as well as its mileage)
Excess Discounts
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An excess is the policyholder agreeing to pay part of
a claim under a certain section of the policy.
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Policies have the following excesses:-
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Accidental Damage
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Malicious Damage
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Fire
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Theft
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Windscreen
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The policyholder can obtain a discount by agreeing to
pay more towards a claim. (increasing the excess)
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Please note that young and inexperienced drivers have
higher excesses imposed by the insurer anyway
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Most policies have a £100 excess as standard: an
additional excess is over and above this so e.g. a £100 voluntary
excess could mean a total excess of £200 - always ask what is the
total excess on the policy.
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Most excesses are given under the accidental damage
section of the policy. Some third party fire and theft policies allow
the discount to be given on the fire/ theft section.
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Some excesses not only apply to the accidental damage
section but also to the fire/ theft/ malicious damage section. you
should check the excesses on each section of the policy.
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Generally Direct companies quote with higher excesses.
Intermediaries give you the options.
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Be wary of a cheap quotation as some intermediaries
may quote with a high excess as default.
Security Discounts
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Insurance companies and the Government were worried
about the number of theft claims.
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Back in the 1980s it was agreed that insurance
companies would impose a theft excess and reward clients/
manufacturers who installed security devices.
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A research centre was set up at Thatcham to analyse
and approve security devices.
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Class I : alarm / electronic immobiliser
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Class II: Electronic immobiliser
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Class III: Manual immobiliser
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Class V: Tracking system
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Customers who add these devices to their car can
benefit with a premium discount to reward their security consciousness
- as well as being less likely to have the car stolen!
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The insurance company ,may make it a requirement that
the security device is working and operative if the vehicle is left
unattended before allowing such a discount.
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