Motor Insurance

Is it worth paying a premium to protect no claims discount? I have 8 years no claims discount, and it would cost me an extra 30 to protect this (doesn't sound like much but money is tight). I can't help suspecting that if you made a claim, they would just ramp up the basic premium before applying your protected no claims discount percentage, and you would still lose out. Or am I just being cynical?

Thanks, Helen.

Depends how the numbers crunch for you.

I have always protected my NCD. Statistically, I have a claim every 5 years (most have been non fault on my behalf - theft, 3rd part damage etc).

The message from "Helen" contains these words:

No, see your own answer below.

Precisely.

Even without claims (20 years+) my insurance premium increases with the second year with any company. I assume it's because I get the first year extra low as a *new business* applicant. So I just b******* off and start a *new business* with another company with a lower rate. Jim

I think you are being too cynical. There might well be an element of ramping up but they'd have to ramp it up to an unfeasible extent in order to recoup it all.

Thanks Doug. So if you protect your NCD, does making a claim (which is covered under the terms of NCD protection) have any impact at all on your renewal premium?

Helen.

"Helen" wrote

If they did that, then you'd just "jump-ship" and go somewhere else, now wouldn't you? - they would still have to show the correct number of years NCD (ie ignoring the latest claim) on the renewal notice, so the new company would give you full NCD ....

Yes, but you would still have to declare the fact that you'd made a claim to the new company - I wondered if you would then be penalised for being a bad risk, irrespective of protected NCD.

Anyway, thanks to everyone for your comments. I've had a look at online quotes using fictional scenarios (declaring a previous claim with & without protected NCD) and it defintiely seems worthwhile paying the extra.

Helen.

Yes, but you would still have to declare the fact that you'd made a claim to the new company - I wondered if you would then be penalised for being a bad risk, irrespective of protected NCD.

Anyway, thanks to everyone for your comments. I've had a look at online quotes using fictional scenarios (declaring a previous claim with & without protected NCD) and it defintiely seems worthwhile paying the extra.

Helen.

Possibly - it's is difficult to know, as different insurance companies may have different underwriting criteria. But if any increase is too large, you check elsewhere for a lower premium. I was an insurance broker for a number of years, and I still review my own motor policy every year.

I am in the fortunate (?) position of having received more in claims than I have paid in premiums. :)

In my experience, its makes a small difference, but nothing like the difference there would have been if I hadn't had protected no claims.

For example, a couple of years ago my car was broken into and around

The effect of losing my 65 % no claims on the other hand, would have taken this 450 annual premium to 1285, a significant increase which would have made it pointless to have claimed for the 600 damage in the first place. (Ignoring the relatively small additional cost of protecting the no claims.)

Nick

But a single claim wouldn't have lost the whole 65%, would it? You normally drop down two levels. You might drop to 45% for one year (premium £707), then 55% for the next (premium £578), then be back at 65% the year after (back to £450 premium), so overall you'd lose only £385, which is better than paying out £600, so it would still have been worth claiming. It could still be marginal, though, depending on how much the excess is.

Yes you're right, I hadn't taken into account that most companies do just reduce the NCD according to various points on a scale, as you mention.

In the past I have had motor policies where one claim means you lose the whole lot - maybe these are getting less common now ?

No.

Don't. If you ever make a claim you will pay back the same amount within 2 years. I claimed 150 for a stolen radio when I had 2 years' NCB. Had I not claimed, my next premium would have gone down. Instead it went up by 100 and the premium after was 50 more. Even when I had regained my 2 years' NCB I still had to declare the claim and pay extra.

Car insurance is designed to make prifits for insurance companies, not for you.

The real cost of car insurance is indicated in other countries. In the Middle East, where roads are much more dangerous, it cost me 50 to insure a Merc for a year TPF&T (they didn't consider NCB except on fully comp policies). In New Zealand, legal minimum insurance is included with their car tax of about 60 per year. The only way to justify European insurance rates is with the previous paragraph.

Obviously. The benefit to you is reduction of risk (at a cost).

I think the reasons car insurance is so high in Europe is i) because people enforce claims through the legal system more often than many other countries, ii) there are lots more cars per mile of road than many other countries, iii) car crime is higher than in many other countries, iv) people in Europe are wealthier than in most other countries so claims (e.g., compensation) are higher (e.g., to reflect loss of earnings) as are admin costs.

Thom