Here Richard Beaven, distribution director at Swinton, which carried out the research, explains the difference between the two, and uncovers some common myths associated with car insurance.

Is there a difference between no claims bonuses and discounts?

Yes – many drivers don’t think so, but there is. A no claims bonus is the number of claim-free years that you have held an insurance policy in your own name, while a no claims discount is the reduction you receive on your annual insurance premium as a result of building up your no claims bonus.

Having a no claims bonus for five years or more could give you a discount of between 40% to 60% on your insurance premium. That’s why it’s so important to understand how it works and how you can protect it.

What is no claims bonus protection?

No claims bonus protection is an optional extension to your motor insurance policy. It’s available when you have built up a history of four or more years of no claims. Taking this out protects your no claims bonus even if you have a claim which is deemed your fault. The number of claims and the period of time this covers can vary by insurer, so it’s worth reading your policy wording or contacting your broker to understand what level of protection you have.

Worryingly, of the 72% of British motorists who had purchased no claims bonus protection from their insurance provider, just under half (45%) didn’t fully understand what they were paying for, admitting they didn’t realise their no claims bonus wouldn’t be affected anyway even if an accident wasn’t their fault.

As a result, nearly a third confessed to paying out for repairs to avoid losing their bonus, spending on average £251 over and above their excess. While no claims bonus protection allows drivers to keep their full no claims bonus, it won’t prevent future premiums from increasing.

If I have a car crash that wasn’t my fault, will I automatically lose my no claims bonus?

Nearly a quarter (24%) of drivers that took part in our research believed that their bonus would be affected if they had an accident that wasn’t their fault.

As long as you are not to blame, and your insurer can reclaim everything they paid out from the party responsible, it won’t affect your no claims bonus.

Who should I ask if I have a question?

While new rules from the Competition and Markets Authority (CMA) have gone some way to help bring clarity to drivers in this area of car insurance, some motorists are still confused about how no claims bonuses work.

Your no claims bonus will grow for each year you’re insured and don’t make a claim. So, the more claim-free years you build up, the more you can save, commonly for a maximum of nine years.

You can take your no claims bonus with you when switching insurance provider, all you have to do is provide proof of your no claims bonus through documentation, such as a certificate, letter or email.

If in doubt about any products, I’d urge drivers to make contact with their insurance broker. All motorists should be able to have a full understanding of what they’re paying for and how their cover is benefiting their needs.