The no claims discount, also known as NCD or no claims bonus, is a discount you get form your auto insurance company if you don't file any claims for a certain period of time. It goes up with each year you have stayed "clean", up to a total of five years usually (I've heard some insurers reward you for up to seven years, but I've yet to see the actual offers on paper).
Some people go above and beyond in an attempt to protect this. They choose to fix most of the minor car damages and fender benders on their own, rather than file a claim on their collision or comprehensive policy. But is it always worth it?
Let's assume you have a collision policy with a $250 deductible and pay $1,000 a year. (This isn't really an accurate quote, here's where you can learn more about actual car insurance quotes) You bump into a traffic pole and break the front bender. Repairs cost $500. Now let's also assume that you haven't filed a claim in two years, and get a 20% NCD, so this year's premium is of only $800. You have two choices:
File a claim on your collision policy, pay the $250 deductible and lose 10 percent points from the bonus, so next year's premium would be of $900.
Pay for the repairs in full in your favorite repair shop. Assuming you don't have another accident by the end of the year, next year's premium would be of $700.
If you pay for the repairs yourself, you will spend an extra $250 out of your pocket, but pay $200 less next year. I'd say a difference of $50 is well worth being eligible for another year's NCD, where you would be saving another $100. Moreover, $250 spent keeps you away from the hassles and the paperwork required when you're filing a claim.
This would seem like a reasonable scenario not to file a claim. Now do the math on your own for a $2,000 claim and a $5,000 one.
A lot of employees use their personal vehicles on company time. I'm not only talking about driving from home to work and back, but also business meetings or driving between the companies' headquarters.
The most common policy offered by insurance carriers to meet such needs is the so-called "business auto policy". It works for all business purposes, except for "livery", defined as carrying goods or people in exchange for a fee.
The driver's insurance policy will always act as primary in case of an accident, regardless of the circumstances and the purpose with which the car was driven. In other words, even if you drive the car during work time, your insurance will kick in if you have an accident.
A standard business auto policy does not protect the employee in case of a lawsuit, so individual drivers will need their own insurance for such cases. The main purpose of the business policy is to protect the employer, and not the driver.
Most businesses will not bother to get anything on top of liability insurance for non-owned cars. Protecting the employee's car is not their responsibility, not to mention that the additional costs would be unjustifiable. Most employees who drive cars under this kind of protection already have their own comprehensive or collision policies and, as I mentioned above, these are primary in case of an accident. So even if the business was to buy extra coverage, it would only be effective if the employee's policy didn't cover enough.
An example should illustrate the concepts better. Assume John drives his personal car and does an errand for his employer, ABC Ltd. John has a Liability umbrella policy of $300,000, and ABC has a business auto policy for non-owned cars with $1,000,000 limits. John doesn't have comprehensive or collision coverage. He causes an accident resulting in $5,000 damages to his car, $25,000 damage to others' property and $600,000 in hospital bills for injured passengers. John will be personally liable for fixing his car, because it's an uncovered incident. His insurance company will pay $25,000 in property damages and $275,000 in medical expenses, and ABC's policy will provide the remaining $325,000.
Saving money is one of those tasks that is so much easier said than done, and I learned it the hard way. However, I managed to stick to the plan I drafted more than two years ago. Here are its main highlights.
Get a savings account
Yes, everybody tells you that you should get an interest-bearing savings account. Little do a lot of people know, however, that this account shouldn't be accessible from your online banking interface -- this way you will never be tempted to wire the funds back to your checking account and go on a shopping spree. If you must go to the bank in person to do it, then you will have plenty of time to think about it twice.
Deposit a fixed cut of all your take-home income
If you earn a fixed salary, then it should be easy -- you know how much money you are going to save every month. Don't cheat! Just imagine that you did a booboo at work and got a x% penalty. You can even set automatic transfers from your checking account into the savings account, so that you never actually see the extra money in your balance.
Match all unnecessary expenses with savings
So you want to go clubbing and spend $200 in one night? Fine, but first deposit another $200 in the savings account. If you want to be really effective with money saving, impose that you'll save 1.5 or 2 times the amount you're going to blow.
Pay off your credit cards religiously
Credit cards aren't inherently evil, if you are a responsible person and use them properly. If you pay off the balances in full at the end of each month, credit cards may even be profitable because you can avail the introductory offers like cash backs, airline miles and the likes.
Be careful what you post or share online, especially on social networks. This video is impressive and scary at the same time.
This video is a bit exaggerated, but it makes quite a good point: stop posting every little detail about your life on Facebook -- unscrupulous people may use it against you. The age of dumpster diving is long gone. Hackers and ID thieves are no longer after your insurance notes or credit card slips when everything is online right in front of their eyes.