Is protecting your no claims bonus worth the money?

I'm considering adding no claims protection at my policy renewal. However I've asked several providers who have given me a quote to illustrate how this protection works in a practical scenario.

I asked them to illustrate what the practical renewal cost savings would be, with and without protection if I made a claim on a policy so that I can make an informed judgement about buying this type of protection.

Not one could provide any kind of illustration either hypothetical or based on my own data.

I then asked "If I pay for a protection policy, make a claim and then renew next year how can I tell if the increases you would inevitably charge because I had made a claim, would be more/less/the same than if I hadn't bothered paying for NCD peotection?" Again, none could provide a sensible answer.

As this is an insurance product sold to private individuals, aren't the insurance companies obliged to provide clear and fair information to customers? Do they provide any sort of real protection over and above not having your NCD protected?

Asked on 28 February 2019 by Gary Lodge

Answered by Tim Kelly
The lovely "opaque" world of motor insurance. In short, you will never get an answer to your questions. I know, I have asked the same. Theoretically a premium is calculated for your risk, then discounted for the "no claims bonus" you have accumulated.

For example, without no claims, the premium is £2000 but with 60 per cent no claims bonus, is now £800. You protect these by paying a premium, but what happens if you make a claim? The claim loads the premium by 15 per cent which is another £300. £2300 less 60 per cent no claims means the premium is now £920.

If you did not protect your no claims and made a claim, the no claims bonus drops from 60 per cent to 40 per cent plus the loading. So £2000 claim loads by 15 per cent which is £300. Take off the 40 per cent no claims bonus equals £1380. These are merely guide figures for reference - different underwriters apply different loadings within calculations. As you can see, protecting the no claims bonus would save you £460 theoretically.

In short, yes they do provide real protection, but the need for it is dependent on how much or a risk you are. If you commute at high-risk times and do lots of miles, it is worth it. If you are low risk, with a low insurance group car and do no commute, it perhaps is not.
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