Understanding no-claims bonuses: How they work and how to maximize savings


03 Jul 2023

Maximizing Savings with No-Claims Bonuses

In the world of insurance, no-claim bonuses play a vital role in determining premiums and providing incentives for driving safely. However, many policyholders may not fully grasp the complexity of these bonuses and how they can maximize their savings. We aim to shed light on the concept of no-claim bonuses in insurance, also explaining how they work and offering practical tips on how to make the most of them.

What are no-claim bonuses?

No-claim bonuses, also known as no-claim discounts, are incentives offered by insurance companies to policyholders who do not claim during a specific period. It is designed to reward safe driving behaviour and can lead to lower insurance premiums as policyholders accumulate and maintain their no-claims status over a while.

How do no-claim bonuses work?

No-claim bonus in car insurance work by rewarding policyholders who have not made any claims on their insurance policies during a specified period, typically a year or more. The concept is designed on the belief that drivers with a clean claims record are less likely to be involved in accidents or repair works, making them lower-risk customers.

The accumulation of no-claim bonuses in vehicle insurance is usually structured in the form of a bonus scale. Each year without a claim increases the bonus level, leading to a reduction in insurance premiums. The scale varies among insurance providers but often ranges from 20% to 50% bonus levels, with higher levels indicating greater savings.

It is important to note that making a claim typically results in the loss or reduction of the accumulated no-claims bonus in the insurance policy, leading to a potential increase in premiums. Therefore, maintaining a clean claims record is essential to maximize the benefits of no-claims bonuses and enjoy lower insurance costs.

How to maximize savings through no-claim bonuses?

To maximize savings through no-claim bonuses, consider the following tips:

  • Safe driving reduces the likelihood of making claims and helps you accumulate a higher no-claim bonus.

  • Maintaining your vehicle regularly can help prevent breakdowns and reduce the need for claims, preserving your no-claim bonus.

  • For minor damages, consider handling them without making a claim which will help you to preserve your no-claim bonus.

Factors worth considering when dealing with no-claim bonuses

When dealing with no-claim bonuses, there are several factors worth considering:

  • If you have multiple vehicles, consider consolidating them under a multi-car policy

  • Be aware of how making a claim can impact your no-claims bonus.

  • Evaluate how your no-claims bonus affects your insurance renewal rates.

  • Consider whether investing in bonus protection is worthwhile for your situation.

  • Review your insurance policy to ensure they align with your changing needs and circumstances.


With the insights gained from this blog, readers will be empowered to make informed decisions and leverage no-claims bonuses to their advantage. To know more visit us at kotak general insurance.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.