Direct Line have just requested I pay them £36.00 for insurance to protect my No Claims Bonus (70%). What are the pros and cons of having this insurance. When all is said and done is it good value for money?
TIA
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It is effectively insuring your NCB. For example, if (god forbid) someone stole your car, your NCB would be hammered, despite not really being your fault. This protects against this. IMHO it is worth paying for.
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The pros and cons are pretty straightforward. The pro is that your NCB is protected, the con is that it costs you money.
The extent of the pro... basically, it means that if you claim, they will rate you based on your no claims discount prior to the claim if it is full. (I am not sure if they would also allow you to go from 4 to 5 years at the same time). However, they will take into account the fact that you have made a claim, so your insurance will rise by ~20%.
If you made a claim, you would not necessarily lose all your no claims, so you would possibly be looking at a 40-50% rise and a roll back to 2 years' NCB insted of four.
They only offer this insurance to drivers who have been claim free for a long period (4 years+) so their exposure is fairly low. Of course, if you think there is a serious risk of being hit by an uninsured muppet or one who disappears, or having your car stolen - and in London or most big cities - I would say there is, then you should probably protect your NCB.
If that £36 is on top of a £300 premium, you have been claim free forever and you live somewhere rural, where you are unlikely to be hit while parked or have your car stolen, it's not such good value and it's a question of how comfortable you are with risk.
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DavidHM. I know you have a legal background, please could you clarify your comment re NCB protection? I thought that, by paying a premium, you protect your (say) 60% NCB in the event of an accident or claim. What I think you are saying is that you protect your NCB %age but that this will then be applied to a premium which will be larger because you have an accident or made a claim?
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Just to confirm that David is spot on.
As I always say, what discounts you get, what protection you, none of it matters. Only the bottom line matters.
65% discount on £1000 is a worse deal than 40% on £400, to use silly figures.
As David says;
Understand how likely it is to happen to you
Understand how, if it did happen, it would affect you financially
Then work out whether or not its worthwhile to you. Its usually pretty marginal.
Also understand how that "business case" might change if you had two accidents within a 2 year period.
Easiest way to find out is to ring for quotes with your own details but adding an accident or two.
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I was hit by a joyrider and lost two years no claims as I did not protect it - my insurance quote with esure increased 50%. I shopped round for insurance and received a quote for less than esure the year before with two years less no claims. Losing no claims doesn't necessarily mean an increased premium.
BTW I'm hearing some very bad reports about Direct Line and their claim handling. A friend had an accident nearly three weeks ago - the company still haven't made a decision on whether to write the car off or repair it.
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Davey,
You are right, shopping around wil invariably save you money on your insurance, but all other things being equal, losing no claims bonus will lead you to paying a higher premium.
Similarly, I am sure that some Direct Line customers have had shocking experiences - only a decent sample size will prove whether they are really good or not compared with the competition. However, Direct Line have been first rate for me. My Mondeo is being fixed at present - went to the body shop last Wednesday (6th) following an accident on the 1st. Car was still drivable, but speed of Direct Line and their associates has been first rate. Even have hire car provided.
Direct Line were one of the few companies that honoured my Kenyan NCD - worth knowing if anyone is moving back (And yes, I insured it and they were still cheaper than the rest)
Jono
nothing to do with Direct Line, Ford, or anyone else....
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I have to say that I was insured with DirectLine insurance some years, when my car got written off they lost paperwork, never instructed the solictors etc. I hated them with a vengance as two years after taking my buisness elsewhere I still had to phone them about it. Trouble is you never know how good an insurer is until you need them.
Back to topic, I would always protect my no claims bonus. I have 9 years protected (I know they only allow 5 years anyway but I'm proud of my nine!). You need to work out the percentage that your insurance would go up if you lost it, and remember that it would take you several more years to build that back up again. In other words, your premiums for consecutive years would also be higher than if you'd protected it.
Even in rural areas you take your chances, hazards are different though, my friends car was written off when a deer hurtled out the hedge and landed on the bonnet! Another's was heavily damaged by a tractor that pulled out without looking. The roads here are never salted in winter, just because you're careful it doesn't mean that everyone else is. I live in the middle of nowhere, (1.5 miles from the public highway) there's some very strange hazards to be found out here LOL
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Only problem with NCD Protection is that in the event of a claim you are locked in to that insurer for years to come as nobody else will honour your NCD as you have made a claim - yes?
I had claim on my Direct Line policy on which I had a 65% NCD so if I shop around for insurance I need to say - "yes I've been claim free for 7 years apart from last year..." :-(
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No, not at all. Any insurer will honour your NCD level from a previous insurer if proof is given, and as your renewal notice will show how many you have got, the new insurer will honour it. It may rate you for any claims but not as much as if you had lost your NCD. A lot of companies offer this now so its quite common and accepted. Just say i have 7 years NCD from my last insurer. How many claims you have is a different question...;-)
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