Have you heard some of the recent radio and television advertising from the big car insurance companies? They go something like this... "For every year you are one of our customers and do not have any claims filed, we will reduce your deductible by one hundred dollars!" Ever wonder just how good a deal it really is? Well let's see if we can shed some light on this subject.



This "No Claims Bonus" term is usually expressed simply as the number of consecutive years you've been covered by your car insurance company without filing a damage claim. For instance, let's say you have had a car insurance policy with your company for three years. And during those three years you have not made a single claim against your policy. This would make your No Claims Bonus score a three. Simple ? right?

Whether you look at this as a bonus or a discount, it has only really become so wide spread in recent years. Why do the car insurance companies offer you this nice little reward? Do they just want to be nice to you? Nope! Insurance rates, bonuses, and discounts have always been determined by some very smart, very well paid people called actuaries. Their sole purpose is to crunch the numbers and sift through the statistics so that the insurance industry knows what rates to charge that will be competitive and provide a profit to the stockholders.

So obviously, some car insurance actuaries and marketers have recently determined that the "No Claim" discount will boost their bottom line. It has not always been that way though. In fact, not that many years ago, some insurance companies would actually penalize you for being a good driver and not having any claims. Some customers would actually have their rates increased or even their policies cancelled! Doesn't make much sense huh? Well, once again the insurance companies were not just trying to be mean. Remember they never do anything regarding the setting of their rates by chance. At that point in time some statistics reflected that in some areas of the country drivers have car accidents every four years on average. So if you have driven safely for three or four years, you were statistically more likely to have a wreck soon. So you were just "due" to file a claim! Makes my head hurt just thinking about it...

Safe, but unhappy customers started complaining and leaving their car insurance companies in droves. They started shopping around for a new policy. And eager insurance agents would welcome them with open arms and good rates. Why? Now get this ? it was because the new company did not have those three or four years of safe driving history with them. So you weren't considered an accident just waiting to happen. You were looked at like a driver with a safe driving record who could be insured for another three years before the cycle would start over again! Now, is your head starting to hurt too?

Well, now it has seemed to come full circle. Car insurance companies seem to have gotten tired of losing customers every three or four years even if they actually chased them off themselves. Someone must have figured out that it is much cheaper to keep existing business instead of finding new customers. So, until the pendulum starts swinging back the other direction, shop around. Now is the time for safe (and lucky) drivers to find some real car insurance bargains.