Is no claims protection a con?

henryscat

Hi, I wonder if some people could give me their opinion please?

I had my car renewal from the AA at £321. The next day, we had to make a claim (our fault, less than £1000, paid £325 excess) and we got a new renewal for £364.

If I hadn't have had no claims protection, apparently my renewal would have been £372.

So it looks like I've paid twenty odd quid or so (can't rember exactly how much extra it cost) to save myself £8?

Anyone out there who knows about these sort of things think no claims protection is worth it or not?

Thanks in advance for your help.

mikey72

That's because your premium goes up by more. Why would any insurance company give a deal that lets you pay less overall, your risk to them will always be the same, and they will always be trying to make as much profit for shareholders. So they will arrange the final premium to suit.
(I've never took it out by the way, I always take the discount in the amount I pay year on year, and keep the money in the bank)
I never take renewals either, I always shop round year on year.

dogbot

AA are a broker not an insurer. They have probably re-broked your business arround and so on a different insurer's rates given the circs the impact isn't as bad.

dacouch

Protected No Claims bonus saves serious amounts of money should you be unfortunate to have two fault claims (where the Insurer cannot recover all of their outlay from someone else) in the space of a couple of years. If the OP had had two accidents in the last one or two years they would have been looking at savings of between circa £150 to £300 per year for a couple of years

Dangermac

mikey72 wrote: »

That's because your premium goes up by more. Why would any insurance company give a deal that lets you pay less overall, your risk to them will always be the same, and they will always be trying to make as much profit for shareholders. So they will arrange the final premium to suit.
(I've never took it out by the way, I always take the discount in the amount I pay year on year, and keep the money in the bank)
I never take renewals either, I always shop round year on year.

You are correct. Well done you. Insurance companies are not benevolent organisations, and may have shareholders/investors etc. That doesnt necessarily mean that they are trying to rip you off.

I have been in the insurance industry for over 20 years. As soon as I had accrued enough No Claims Discount, I have always bought Protected or Guaranteed NCD.

All it takes is a couple of bumps (hit and run / vandalism / theft etc etc), and your premium could shoot up. 2 claims in a year, and your premium will really be jumping up.

Ok. The premium may still increase a bit (following a claim), even with Protected NCD, however, in the majority if cases, the increase will be very much less, than if the NCD had been reduced.

In summary. You pay your money and you take your chance. Not all factors are within your control (ie other drivers). It is also a fair bet that, if you had an accident/claim, you will wish you had taken Protected NCD.

DM

mikey72

At the end of the day as you say, pay your money.
Protected no claims is just more insurance.
Overall, insurance companies are always going to make money selling it. They won't sell protected no claims if it runs at a loss. So as a customer, throughout your life, it will always cost more overall to pay for protected no claims.
I'm sure anyone that has a claim, would wish they had insured against it. If you want to feel better if you didn't though, go on a comparision site and get a quote with and without.

Daxx

Personally I would always protect my no claims.

3 years ago, after I had been driving 2 years I was in an accident and liability was disputed..when I came to renew the dispute was still on going and so had to renew with no, "no claims". Cost me just over a grand (double what it should have been with the no claims bonus).

Luckily once the dispute was settled and I regained my no claims I was refunded the difference in premium which I had paid, nearly £500. I dont want to be in the situation again where I have to find double my premium, especially now I have a bigger car for the sake of a little bit extra a month.

Just my opinion.

henryscat

Thank-you everyone for your replies. So what I can gather then, is if I have two accidents, this would wipe out my no claims bonus? (apparently the last accident would have just knocked it down from 10 years to 7 or 8 years) and then my premium would start to seriously go up?

Thank-you for your advice, I have decided to keep my No claims protection (for about £10 as it turns out)

:beer:

mikey72

Daxx wrote: »

Personally I would always protect my no claims.

3 years ago, after I had been driving 2 years I was in an accident and liability was disputed..when I came to renew the dispute was still on going and so had to renew with no, "no claims". Cost me just over a grand (double what it should have been with the no claims bonus).

Luckily once the dispute was settled and I regained my no claims I was refunded the difference in premium which I had paid, nearly £500. I dont want to be in the situation again where I have to find double my premium, especially now I have a bigger car for the sake of a little bit extra a month.

Just my opinion.

I think you may have had a shock if it had been decided you were responsible, and instead of having a no fault claim on your record, had gone with a fault claim, but protected ncd still. I don't think you would have got anything like the £500 back.

henryscat wrote: »

Thank-you everyone for your replies. So what I can gather then, is if I have two accidents, this would wipe out my no claims bonus? (apparently the last accident would have just knocked it down from 10 years to 7 or 8 years) and then my premium would start to seriously go up?

Thank-you for your advice, I have decided to keep my No claims protection (for about £10 as it turns out)

:beer:

If I have two accidents in a year, first one takes me from 70% down to 55%, second one takes me from 55% to 35%, I need to three in one year to get to zero.
If I take the protected for life option though, every day can be "The Wacky Races", but then the basic premium would probably double each time, to compensate.
For a comparison of the cost, your claim would have taken my ncd down from a possible 75% to 72%, so a difference in ncd of 3% less overall!
(The second claim in the same year takes me down to 65%)

Daxx

You can only protect your no claims bonus when you have held it for a certain amount of years so if I was deemed at fault then I would have been able to protect it. And no if it was deemed my responsibilty then I wouldnt have expected any rebate of my premiums.

R3negadeuk

AA do not broker their insurance policies. This was not the cause of the increase of your premium.

The insurance is handled by Acromas whom own AA. Acromas underwrite their own policies.

I will explain what happened, make of it what you will.

Lets say you have a full protected NCD. During the policy period, you have an accident which is classed as your fault.

When your premium is calculated for the renewal term, you will still have a full protected no claims bonus, however, you will be classed as a risk. The increase in premium is due to the risk classification.

If you did not have a protected NCD, you would have had at least 20%(NCD reduction due to a claim) on the previous premium, and you would still be classed as a risk, so no protection would have cost more money.

Based on your figures, your premium was £321 and you approximate that £20 was for the protection. That would leave a net premium of £301. I am guessing that you have a 70% NCD, meaning pre-deduction, your premium is approx £1070 pa.

If you had lost your NCD, you would lose 20% of your NCD taking you to 50%, giving a premium of £535 pa. There would also be the "risk" weighting for the accident, which on your figures is between £40 and £60, we will call it £40 to be conservative.

So, no protection would have worked out your new premium to be £575 pa. So it works out that the extra £20 did in fact save you £211.

Whether or not this is worth it, I don't know. However, in the short term, it does seemed to have saved money in this instance.

I hope this makes sense?