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Protected No Claims Discount

gices
(Level 5)
07 Jul 2014 12:30, updated
23 Nov 2009, published

Car insurance is such a delicate thing – it takes a very long time to earn the trust of insurance companies and just when you think you’ve finally made it to the VIP club who pay cheap premiums, all that is taken away from you in the blink of an eye. You can scream as much as you want at how life is unfair but the reality wouldn’t change and that is why it’s probably better if you have protected no claims discount to save you the regret afterwards.

Unfortunately, not everyone can opt into this scheme because you need to have accumulated at least 4 years no claims bonus to be eligible for it. This is kind of a reward for drivers who have been claim-free for a long time and don’t want to see that lost because of silly mistakes of other drivers or because they need to make a rare or occasional claim.

How much does it cost to get your no claims protected and is it worth it?

There’s no fixed fee for protecting your no claims because you usually pay around 15% of the cost of your premiums. So on a £400 insurance quote, you’re likely to pay on average £60. Most insurers will make it clear that you shouldn’t have more than 2 fault claims in a consecutive period of 3 years and others might even insist that in your first year only one claim is allowed.  This means if you make more claims than what you are allowed, your no claims bonus is then no longer protected.

If you do not have protected no claims bonus and you happen to make a claim, then you will lose all or some of your no claims discount and your premiums are likely to go up when it’s time to renew. Having said this, even with your no claims protected, you’re bound to see an increase in premiums if you have made a fault claim but you’re going to pay less than if didn’t have that no claims protection in place.

When underwriting insurance, your gross premiums is calculated first and then your discount is applied. Don’t be misled in thinking that because you’ve got your no claims bonus protected that your premiums will either stay the same or become cheaper whether you make a claim or not. This is not the case because any claims that you make will be taken into consideration when calculating your next premiums. So whether you stay with the same company or move to a different insurer, your premiums will definitely increase if there are claims on your records.

As an example, if your gross premiums were £500 and you had 20% no claims discount, you would pay £400. Now if you have an accident where you were at fault, you could see a 20% increase in your car insurance quote. This means your new gross premiums would be £600 and if you still had your 20% discount, you would only pay £480 compared to the whole amount if you lost your no claims. This is how protecting your no claims can save you money in a world where uncertainties rule.

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Comments (2)
anonymous
anonymous  (Level 2)
07 Jul 2012 18:06
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I have been a named driver on my husband's insurance for the past 9 years, I am now the main driver of our car, but will stay as a named driver, we always have protected no claims on our policy never made a claim in 24 years. If as a named driver I had a accident, how does this affect my husband's no claim bonus, would it be the same as his, etc no more than 3 claims in 2 years according obviously to the insurance company.

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anonymous
anonymous  (Level 2)
07 Jul 2012 18:06
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If I had 9 years no claims protected and crashed the car due to being over the limit does the no claims discount still stand as i have asked for the NCD from my current insurer and they have informed me that it has affected the NCD!

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