What is a no claims bonus?
If you do not make a claim during your period of insurance cover, you are entitled to a discount on your annual premium, which increases until you have been claim-free for four or more years, at which point you may protect it.
A Protected No Claim Bonus will be unaffected by any claims you make. However, many insurers reserve the right to alter your premium following a claim or a motoring conviction.
If you remain claim free and have earned the maximum No Claim Bonus you may also be entitled to a loyalty discount on your premium. (However, you may lose this if you make a claim).
What is a green card and when do I need one?
Your Certificate of Vehicle Insurance and the policy to which it relates is sufficient proof that you are insured to drive your car in member countries of the European Union. The Czech and Slovak Federal Republic, Hungary, Iceland, Norway and Switzerland are also covered. However, from time to time, participating countries may require a Green Card and this is available from your insurer on request.
You will need a Green Card for all countries outside those listed above. Contact your insurer well in advance of your departure for further details. You may be charged for this service
How do insurance companies work?
Insurance companies collect premiums from many policyholders so that they can pay out on those which have a claim. The size of claims vary from around £100 for a windscreen to hundreds of pounds for a small dent right up to literally millions of pounds for serious injuries – payouts of over a million for people who have been severely disabled are becoming increasingly common.
Why has my premium gone up?
Insurance premiums have been rising for the last year or so because insurance companies are losing money on car insurance. They underestimated how much they would be paying out in claims and so are having to put premiums up to cover what they think the future cost of claims is likely to be. It is not easy for insurers to estimate how much premium they will need to cover claims because the premiums are set now for claims they will be paying out over the next seven years or so – this is how long it takes serious injury cases to get to court. The size of injury awards in seven years’ time is very unpredictable especially if the law changes during that time.
In addition to collecting premiums, insurance companies make money from investments. They invest the share of the premium left after paying the expenses of running the business and their marketing cost. Over the past four years most insurance companies have lost money on car insurance even after adding back investment income.