No claims discount is a reduction in premium offered by vehicle insurance companies at the time of your Car Insurance renewal. It is provided if you do not make a claim during your preceding policy tenure. The rate of this discount increases every year if you do not claim on your insurance policy and are not a party to an accident.
Guaranteed Savings with No Claims Discount
The UAE Insurance Authority Board of Directors’ decision No. 41 of 2017 warrants applicants a guaranteed discount of 10, 15 and 20 percent for a no-claim record of one, two and three years respectively. Some insurers may even offer discounts up to 50 percent to individuals who have accumulated a 5-year no-claim record.
How Making a Claim Affects No Claims Discount
A useful element of no claims discount is the step-back feature which ensures that while you may lose a part of your discount if you make a claim, it will not revert to zero. This is ONLY valid if the accident was not your fault. However, there is no standard formula to calculate the loss and how this step-back scale affects your discount varies significantly from one insurer to another.
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No Claims Discount Protection
This is a special protection feature on your no claims discount which allows you to make a claim on your policy without risking your discount in the subsequent year. It ensures that your discount remains intact on renewal even if you present a claim, subject to some restrictions. While some insurers allow multiple claims up to a certain pre-specified limit, others might limit the number of at-fault claims you can make before your discount is forfeited.
It should be noted that this feature is valid ONLY if the accident is not your mistake, as shown in a police report. Also, this feature protects your discount and not your premium. Your insurer has every right to increase your premium in the year following a claim, while your rate of discount will remain the same.
Transferring your Discount
No claims discount belongs to the driver and not the vehicle. It can, therefore, be transferred to another vehicle or a different insurance firm. For customers intending to switch insurers, the UAE Insurance Authority ruling requires firms to provide a free of charge no-claims certificate showing their claim record in the preceding years.
Important Points to Remember
- No claims discount is only available at the time of renewal of a policy.
- It belongs to the driver and not the car.
- It can be applied to a second car as long as the main driver remains the same.
- It can be transferred if you choose to switch cars or insurance companies.
- At-fault claims may lead to loss of no claims discount either in part or in full, while no-fault claims typically do not affect these discounts.