No Claims Discount Protection, also known as NCDP, is one of the extras we’re often offered on taking out a car insurance policy. In the case of most insurers, if you are lucky enough to have a full 5 years’ no claim discount, this option will be open to you. Basically, your choice is to pay an additional charge for the privilege of protecting your NCD in the event of a claim. So, is it worth it?
The premium that you pay could rise by around 30 per cent if you make a claim, but paying to protect that NCD adds £23 to the average policy, so if you remain claim free you will end up out of pocket by that extra amount. Obviously it is sensible to build up a NCD over a period of years, and it can be a very useful tool in the negotiations when insuring your car, especially when insuring with a new company. Many drivers will pay well over the odds to protect that valuable NCD, as they do not want to risk losing it.
No Claims Discount Protection – The Choice
Unfortunately it is not always about how you drive – sometimes it is someone else that could cause you to lose that precious NCD; for example, being involved in an accident that isn’t your fault, where the other party is uninsured, or in the many cases where blame isn’t clear or is contested. It is also necessary to read and comply with the small print in your policy of course.
So back to the main question, should I pay an additional premium to protect my no claims discount? For a driver that has had no claims for a good number of years, it is certainly well worth protecting, if only for the peace of mind that it’s a lot less likely that all of your trouble-free years might be wiped off in one fell swoop.
An insurance expert says on the subject:-
“Protecting your no claims bonus is very much a personal choice, but it will usually add anywhere between 5 and 15 per cent to your premium, depending on the insurer. The benefit is that you will not lose your bonus in the event of a fault claim, which, it must be remembered, can include claims where the third party is unknown, such as being hit while parked.
You will usually lose 20 to 25 per cent of your bonus following one fault claim, and your insurers may load the premium in addition to this, so in this instance you would have been significantly better off protecting your bonus. It should be remembered that, if you have a fault claim, even if you have protected your bonus then your insurer may still increase your premium at renewal.
No Claims Discount Protection – Pay More to Save More
Ultimately, the customer must make a choice of paying more to save money in the event of a claim, or take on the risk of losing some of their no claims bonus. As with the choice between insuring third party, fire and theft or comprehensive, the customer must decide how much of the risk they take on themselves or pass onto the insurer.”
Another thing to remember here is that it’s the discount that you are paying an additional charge to protect, not the amount of the actual insurance premium. If you have a fault claim, even if you have protected your bonus, your insurer may still increase your premium at renewal. Some drivers have reported that after having made a claim, they are penalised the next year with an increase in their premiums whether it was their fault or not, or whether or not they had NCD protection.
To sum up, of course it’s a personal choice, but most drivers who manage to obtain a 5 years’ no claim discount or more, will not only want to protect it, but will happily pay the extra premium to do so.
- Trish Conti