Another car insurance term many car owners will hear about when they begin the journey of getting car insurance is the no-claim bonus. The name sounds exciting because it literally means a bonus insured car owners get without filing a claim.
No-claim bonus applies to every type of general insurance. What, then, are now included in a general insurance plan? Vehicle insurance, travel insurance, health insurance, and many others. That’s to say, as a car owner, you can get a no-claim bonus.
But how does a no-claim bonus work in Nigeria?
No-claim bonus is like a reward insurance companies offer car owners who have not made insurance claims for long periods. For instance, if you have an active insurance policy and you didn’t make any claims after a year. The insurance policy is getting closer to the period of renewal. Your insurer will then offer you a no-claim bonus as an incentive.
The no-claim bonus rewards you for driving safely all year round and not making any insurance claims. However, it’s not paid in cash to car owners. Rather, it manifests as discounts car owners get while renewing their vehicle insurance.
Car owners in Nigeria can benefit in many ways from a no-claim bonus. In Nigeria, for instance, here are the major benefits associated with a no-claim bonus.
A no-claim bonus helps car owners get premium discounts on policy renewal. It means your insurance provider will give you the privilege of paying less premium than the amount you paid for the same coverage the previous year.
When car owners follow the rules of no-claim bonus, they get a sizeable discount on policy renewal for years, and this saves you a lot of money that would have been used to pay for your insurance premium.
One interesting thing about a no-claim bonus is that it’s transferable. How does this work? If you have a no-claim bonus and decide to sell your car, the new owner of the car can benefit from the no-claim bonus. The No-claim bonus stays with you even when you switch to a different insurance provider.
How does the no-claim bonus work in Nigeria? Here’s exactly how it operates in the country:
When your insurance company provides you with a no-claim bonus, they encourage you to avoid making insurance claims and to keep driving safely. As a result, an insurance policyholder with a no-claim bonus will think hard before filing any claim. Because the moment a claim is filed, you’ll lose the no-claim bonus.
No-claim bonus is important in car insurance because car owners spend huge amounts on comprehensive car insurance during the lifetime of their vehicle. The more the value of a car, the higher the premium. Having a no-claim bonus helps to reduce the premium a car owner pays for their car.
How do insurance companies calculate the non-claim bonus? Here’s how it’s done:
If you avoid making claims for over five consecutive years, your insurance provider gives you a 50% insurance premium discount. However, the discount goes to 0% when you make a claim.
Also, if you do not file a claim in your first year of getting insured, you will also get a 20% discount for your next premium renewal. It’s a great way to save money on car insurance premiums and an encouragement to drive safely.
No-claim insurance is applicable at the moment of renewing an insurance policy and only on the “Own Damage Cover” component of your car insurance policy. Own Damage is the damage done to an insured car. This coverage is seen in a comprehensive car insurance policy. That’s to say; it does not work with a third-party car insurance policy.
Conclusion
Getting comprehensive car insurance is how you gain access to a no-claim bonus. With a comprehensive insurance policy, enjoying discount benefits associated with the no-claim bonus is possible.
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