No claims bonus madness!

Ferrety44

So I've just had the most random discussion with a well known insurance provider. Something I didn't know and am not entirely convinced about. Please help!

I recently purchased a second vehicle. I went with the same insurer and opted for a multi-car policy. I just received a letter asking for evidence of my no claims bonus. Simple, I thought, it's them. So I rang them only to be told I cannot apply my no claims bonus to two different vehicles.

What?

I thought a no claim bonus was because you statistically were less of a liability and therefore unlikely to claim. I argued this point and was told it was policy and I had to choose which of my vehicles I would apply the discount to and the other would start from zero and I would have to build it up - leading to two separate no claims bonuses.

What?

Obviously, I then discussed which vehicle applying it to gave me the better discount and for now I've gone with that. I asked them if I went with another company, would they allow me to apply the discount - I was told no, not if I was using it with them: this is all news to me and again just makes no sense - I'm not a different driver when I drive the other vehicle.

I then asked, if tomorrow I have a major accident in the vehicle that now has no no claims bonus, can they take my no claims bonus from the other vehicle? He said no.

This bit I completely don't believe! I believe that my insurance with them would go up on the other vehicle too!!

Is any of this correct? I used to have a motorhome, and that insurer did allow me to use my car no claim bonus against my motorhome too. I imagine on the remit that I was only going to be driving one or the other.

Could someone out there help me make sense of this?

Quentin

The insurer is correct.

Your NCD is awarded for not making a claim on your policy.

On a multi car policy each vehicle has its own NCD. Thus if you make a claim then the only NCD impacted is the one attached to the car you are claiming for

Though any claim could well result in the premium increasing for all cars you have because your driving history will have changed

Aretnap

Ferrety44 wrote: »

I thought a no claim bonus was because you statistically were less of a liability and therefore unlikely to claim.

That's where you're going wrong. No claims discount is a marketing gimmick - nothing more, nothing less.

Initially it was a form of loyalty bonus, designed to encourage your customers (especially the good ones who dind't make claims) to renew year after year, and the idea was that you'd only get it if you renewed with the same insurer.

Well, that went the way of all loyalty bonus and very soon insurers realised that if they wanted to attract customers from their rivals, they'd have to offer to match their rival's no claims bonuses. For much the same reasons Sainsbury's might offer to accept Tesco's money off vouchers - not because they're under any legal or moral obligation to accept them, but because it's a good way of poaching Tesco's customers.

But ultimately it's still a discount that is attached to a particular policy. And if you're not renewing a policy (either because you're insuring a car for the first time, or because you're buying a second car) then you don't have a current insurer offering you a discount - so there's no incentive for any other insurer to offer you a discount either. To push the supermarket analogy further, complaining that you can only use your NCD on one policy at a time is a bit like getting a "£10 off your next shop" voucher from Tesco, then complaining that you can't use it three times at three different supermarkets.

That's the theory anyway. In practice of course NCB has been rather uncomfortably crowbarred into the general risk-assessment model that insurers use. So if you're insuring a second car for yourself, and it genuinely is a second car for yourself and not a car for your teenage son, then if you shop around you may find an insurer willing to mirror your NCB on it or give you an equivalent discount. Not all insurers will do this however; the default position is still one NCB one policy.

I then asked, if tomorrow I have a major accident in the vehicle that now has no no claims bonus, can they take my no claims bonus from the other vehicle? He said no.

This bit I completely don't believe! I believe that my insurance with them would go up on the other vehicle too!!

It probably would. But there are two separate elements: a base premium, which takes account of the type of car, your driving history, your location etc etc; and a no claims discount which is then deducted from your base premium.

If you had an accident in Car A then it's likely that the base premium would rise on both cars A and B, but you would still keep the discount on the premium on car B. So the overall premium on car B might well increase, but not by as much as it would if you lost your NCB on that car as well.

trailingspouse

Some niche products will match the NCD of your 'mainstream' car - obviously this is what happened with the motor home. The same happens with classic cars.

But generally you would build up NCD on each car separately.

Having said that, some insurers might be willing to allow you an introductory bonus (usually 2 years' worth) - try your current insurer, or the insurance company that has your house insurance assuming they also do car insurance.

Who will be the main driver of the vehicle? If the second car is for your spouse or a child, it would be better for them to insure the car in their own name and build up their own bonus - it wouldn't be fair for you to have two and them to have none.