Literally millions of motorists will pay sizeable amounts to avoid making claims to their insurance companies. These individuals fear losing their no-claims bonus in which they receive a consecutive reduction in annual insurance premiums for not making any claims.

One motorist damaged her neighbour's car to the tune of £300 and paid it out of pocket rather than filing a claim to her insurance company. She did not want to lose out on her no-claims bonus and since her policy excess was around £200, she would have only been compensated for £100 anyway.

Insurance industry statistics show that one of every four motorists will pay out of pocket rather than relinquish their no-claims bonus by making an accident claim. Approximately nine of every ten motorists received a no-claims discount and receives consistently lower annual insurance premiums the longer they go without making a claim. Conversely, those who do make a claim may have their premiums raised substantially, in some cases this has been 50 percent.

Of course motorists can maintain their no-claims bonus by paying a higher premium which would allow them to make a claim and not have an increased premium, but they are already paying for that in the way of the higher premium.

No-claims bonuses are usually earned by motorists with good driving records over a period of four years without claims. If those motorists choose to take the maximum protection under a no-claims bonus, their premium could rise within a range of eight to twenty percent.

Because the protected no-claims bonus definition is highly variable across the insurance industry, one insurer could allow no-claims bonus protected motorists to make up to two claims within a three year period without effect to their premium, but the following year their no-claims bonus would be dropped from their policy.

Another set of insurers allows one claim in a year, and two within a three year consecutive period but if claimed this would add £70 to the annual £400 policy.

A much more hard-line approach is taken by yet another insurer who allows no more than two at-fault claims in any five-year period with a cost to the insured motorists of approximately 7% of their annual premiums to maintain the no-claims discount.

The no-claims bonus is not a guarantee that after an accident, even if not claimed, the motorist's policy will not rise. Each motorist should always understand how and what is covered under their policy as the no-claims bonuses are so broadly defined across the industry and may not cover what they think.

One insurer has the most beneficial no-claims bonus to motorists in which its customers that contract for the maximum no-claims bonus protection police are allowed to make unlimited claims without fear of loss or reduction of their no-claims bonus. Furthermore, under that type of policy, the insurer guarantees not to cancel the policy or raise premiums for any claims made while in the policy. The insurer is able to offer these generous no-claims discounts due to having more drivers with proven safe driving records.

A shock to some is the fact that having two drivers actually reduces costs on an insurance policy rather than increasing the premium and discounts for married couples abound in the insurance industry. Some companies allow unmarried couples and significant others to be listed as the secondary motorist on the policy as long as they reside at the same location.

A 35-year-old man without any claims in a five-year period does have a no-claims bonus, but would still pay £374 a year because he is single, but when he adds his partner with a good driving record the policy reduces to just £340 per annum. If the couple splits due to divorce or break-up the policy would rise upon renewal as it would cover the single again.