Car insurance - is protected bonus a big con?

msmicawber

I don't bother with the protected NCB malarky as I found that applying for it raised the premium, and not applying for it lowered it. I decided that I'd take the chance that I'll continue not to have reason to claim and that if I have to, I'll pay slightly higher premiums after the event rather than beforehand 'just in case'.

mouseclick

Hazzanet wrote: »

Yes, although the difference in the base will be discounted by you NCD. Therefore if you have 65% NCD and the base increases by £100, you'll only pay £35 of that £100 base increase.

Yes I understand now, but I had always thought that NCD was the discount you get for being a lower risk, ie by not having an accident for so many years. I thought I was paying the protected bonus to "protect" against this.

Considering the fact I have a low value (though nice) car that young London kids don't want to joyride in, then for me I may as well forget about the idea of claiming altogether and pay the cheapest premiums.

If of course I had a top of the range model, I might find it sensible to get fully comp with protected bonus. Used to do this when I was younger of course.

But as usual, following Martin's tips has found me a better deal with Bell (a division of Admiral), saving £50 with the better cover, (i.e. protected bonus including FREE European cover). This actually works out LESS than the equivalent 3rd party only cover without protected bonus. :money:

I live fairly near the new Eurostar Ebbsfleet terminal, so I may take the car through the channel tunnel near Christmas for some duty free, with the free European cover. Oh well, I have learned something new, and got a good deal, so I am happy. Thanks all!

MarkyMarkD

Protecting NCD isn't a con, but it isn't particularly good value either. At the end of the day all you are doing is paying an additional premium in order to protect a very narrowly defined risk.

And you are typically paying around 15% of your premium to do so, when you'd only lose 20% in NCD in any case for one claim.

That isn't good value unless you are going to claim pretty frequently.

ic

A friend misunderstood what NCD protection was, and under the advice of a work collegue decided not to take it. In a three month period he crashed twice. His NCD went from five years to one, and his renewal premium jumped from £600 in year five, to £1100 after the accidents. Don't forget also that it will now take him four years to get back to the five year discount - so he'll be paying more each year until he's back to the maximum discount - far more than the cost of the NCD.

Yes, its insurance on insurance and easy to argue that if you never have a claim it isn't worth it - but then again if you never claim insurance, isn't it technically all money down the drain - you insured for a risk that never happened? In my opinion worth it.

mouseclick

ic wrote: »

Yes, its insurance on insurance and easy to argue that if you never have a claim it isn't worth it - but then again if you never claim insurance, isn't it technically all money down the drain - you insured for a risk that never happened? In my opinion worth it.

I think it's worth it if you do a lot of driving, have high premiums to pay, have a low excess on the policy, have fully comp, and are a new or inexperienced driver or, a new or inexperienced driver has access to the car.

On the other hand, my full 3rd Party Fire and theft premium is £400. I haven't had an accident in 10 years (touch wood), no one would want to nick my car and it has an immobiliser anyway, plus I only drive around 9000 miles a year. So, apart from the fact that my quote for this year is cheaper with protected bonus than without, I don't think I will bother with it again. With an older car, it is not economical to claim on insurance for an argument with a supermarket trolley or a lamp-post even with the best insurance, so there seems little point in me buying insurance designed to reduce my potential losses in the event of a claim or multiple claims. But it's nice to have, if it doesn't cost much.


Oh actually there is one other point that would be interesting to know... if anyone here does know.

On confused.com, the NCD only goes up to 5 years, whereas the protected bonus goes up to 10. Confused also say your (protected?) bonus is only valid if less than 2 years old.

Am I reading this correctly? That if I drop my 9 years PNCD for 2 consecutive years in favour of non-protected, then I will lose my protected discount?

Confused, of Charlton

Hazzanet

mouseclick wrote: »

Yes I understand now, but I had always thought that NCD was the discount you get for being a lower risk, ie by not having an accident for so many years. I thought I was paying the protected bonus to "protect" against this.

As a broker myself, I can see both sides of the coin. Both why punters are miffed that the premium has gone up when they have PNCD and why insurers alter a base premium when the risk profile has changed. Ah well

Glad you got a better deal though - It always pays to shop around

Hazza

Hazzanet

mouseclick wrote: »

Am I reading this correctly? That if I drop my 9 years PNCD for 2 consecutive years in favour of non-protected, then I will lose my protected discount?

Confused, of Charlton

Nope.

NCD generally hits it's top rate at 5 years - normally between 60 and 70%. I think NU's is 65%, whereas CIS is 67%, so on and so forth.

The two year rule is that if you have a policy and let it lapse at the end of cover, for example, if you sell a car and don't buy a new one, you have two years to re-start a new policy with the same NCD. e.g. if you sell your car in Nov 2006, you have until Oct 2008 to use the NCD on a new policy before it "expires" and you start from 0 years again. Sometimes, you can wangle 1 or 2 years introductory discount if you're lucky though.

From my understanding (and I must admit that I' deal with commercial insurances rather than personal) you can go on and off protected NCD as you see fit, although some insurance companies may impose their own terms on doing this.

raskazz

Hazzanet wrote: »

From my understanding (and I must admit that I' deal with commercial insurances rather than personal) you can go on and off protected NCD as you see fit, although some insurance companies may impose their own terms on doing this.

Yes, this is pretty much the case. Obviously the main restriction is that you normally cannot add NCD protection mid-term.

MarkyMarkD

Some insurers have NCD scales which go further than 5 years.

With esure, it goes to 5 years (70%) + 5 years with them (1% for each to a total of 75%) i.e. a maximum of 10 years. And if you claim, the reduction in percentage discount is next to nothing due to the 10 year scale.

E.g. if you are on 75% after 5 years with esure (having started on full NCD when you joined esure) you only go back to 72% after one claim (back 3 steps) and 65% after two claims in the same year (back 3 more steps).

So paying 15% for NCD saves you a 10% loss of NCD (OK, yes, it's 10% in year 1, then 5%, then 4%, then 3%, then 2%, then 1% which is 25% in aggregate over the following 6 years, and those figures are all applied to a higher base premium too).

I don't think that's worth paying for, IMHO.

I can see why esure do it, though - I have been on 75% NCD with them since my last renewal last March and it makes me want to stay with them rather than getting insurance elsewhere. It's that rare thing in the insurance market these days - a genuine loyalty discount.