A no claims discount is earned after years of safe driving and offers the reward of cheap car insurance – but is it worth insuring the discount as well?
Drivers can build up a no claims discount of up to 80% that significantly cuts the cost of car insurance quotes.
Many insurers also let motorists pay extra to protect that discount – if you have an accident, the no claims bonus stays intact but the protection comes at a price.
Drivers should expect their insurance premiums to rise by around a third if they protect their discount – which can add up to an average £33 off car insurance, according to industry insiders.
So what benefit is a protected no claim discount?
The theory is if a driver has a crash, the following year’s car insurance quote will still be cheaper because the discount is still in place.
Some insurance brokers claim this is a fallacy – that yes, the no claims discount remains protected, but the cost of insurance will still go up because of the accident, so any NCD saving could be cancelled out.
If the driver opts to switch companies for a cheaper car insurance quote, the NCD protection is wiped out because the new firm will want the driver to declare any recent accidents.
Honest answers will result in a raised insurance premium.
The net effect for drivers in either case is that having an accident scuppers the benefit of any no claims discount protection and they pay more for their car insurance as well.
A win-win for the insurer but not much good for the consumer.
Another point to look at is what happens to a no claims discount if the driver has an accident.
The small print of the policy will explain the consequences – some may allow a claim without any penalty while others may rescind two or three years of discount.