Why protect your NCD Article
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by: GiannaHarper
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You lose NCD each time you make a fault claim, which means the insurer has not been able to recover the costs of the claim from someone else. This could mean no-one else is to blame for an accident, or that the insurers have shared liability (and the costs) between them. Uninsured drivers, vandalism and theft claims are also considered to be fault as there is no other party to cover the costs of the claim. Usually your NCD will step back by 2-3 years as a result of a fault claim, although you can potentially lose all your discount in one go, significantly increasing your premium at renewal.
No Claims Discount Protection
Protecting your NCD is effectively an extra insurance policy; you will be charged an extra premium each year to prevent larger hikes if you need to make a claim. You can normally protect 4 years or more NCD and the cost is typically 10-15% of your insurance premium.
Normally there are limitations on the protection, such as allowing you only 2 fault claims within 3 years before removing the protection for a period of time. Some companies offer unlimited protection, but its highly unlikely you could take that to another insurer.
So is it worth it?
Normally, yes. The value of full NCD is up to 75% of your premium, so you may well feel its worth paying 10-15% to hold onto your discount. Bearing in mind that a lack of No Claims Discount represents a higher risk to insurers, increasing your premium further, your NCD is a valuable commodity which is worth protecting.
Protecting your NCD, however, does not mean your premium will stay the same after making a claim. Your new claims history represents an increased risk so the cost is likely to rise. What protection does is limit the increase: you wont be penalised by the additional loss of NCD.
In the end, insurance is about risk and each customer needs to weigh up their own situation against the cost of the premium for different levels of cover. If you have a cheap car, for example, you may feel its not worth taking out comprehensive cover. Equally, if you have an exemplary claims record, you may feel protected NCD is an unnecessary expense as you pay every year for something you dont need to use. But you can never prepare for everything. Protection gives you the peace of mind of knowing that if you are hit by an uninsured driver or your car is vandalised, you can claim on your insurance without losing your bonus.
About the Author
Anabel Bynam is a keen writer about car insurance and home insurance products.
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