Cash Back Bonus Vs. No Claims Bonus

Insurance companies sometimes offer a cash back bonus or a no claims bonus as an incentive to discourage you from claiming car insurance for small losses. On the surface this is an attractive offer, but what is the difference between these two benefits?  In this article, we help you to understand what they are, and how you can get the most benefit by not claiming from your insurance company. 

No-Claims Bonus

A no-claims bonus offers you a discount on your monthly premiums. If you don’t claim from your insurance company for a certain period, you're rewarded with a lower premium going forward. The more claim-free years you accrue, the more your reduction in premiums you'll get.

Should you need to claim from your insurance, in some cases you will lose your entire discount and your premiums will increase in the following year as you will now be considered a greater insurance risk. With other insurance companies, you won't lose your entire discount, only part of it, and you can still enjoy slightly lower premiums.  

Cash Back Bonus

If you don't claim from your insurance company for a number of years - usually four to five - some insurers will offer you a cash-back bonus. Depending on the insurance company, you will either receive a year’s worth of premiums or a percentage of the total premiums paid that you'll then receive back in cash.

Some insurance companies disqualify you completely from receiving a cash back bonus from them, and you have to start over accumulating claim-free years. Some insurance companies will still allow you to claim cash back even after you have claimed, depending on the nature of your claim. Find out from your insurer which claims will not affect your cash back bonus.