Is Protected NCD a con?

Joe_Horner

I'm the world's biggest cynic when it comes to insurance - having paid religiously for over 30 years and never claimed a penny back until a couple of glass claims last year that didn't affect my no claims but DID increase my renewal - I think I'm entitled to be

But, on my last renewal, the protected NCD cost an extra £3.50 which even I would struggle to describe as a "con"!

Clive_Woody

People often misunderstand what protected NCD means and get angry when their policy cost goes up after having an accident.

As the name suggests, it is the "No Claims Discount "that is protected, not the policy price that is somehow fixed. Aretnap gave a very nice example of how this works and how protecting the discount certainly does pay off if you have an accident.

motorguy

Aretnap wrote: »

Here's how it works (numbers are examples and not necessarily real)

Your base premium is £1000. You have full no claims (5 years) which gives you a 70% discount. So your premium is £300.

You have an accident. Your base premium goes up to £1200 to reflect this. You also drop back to 3 years NCD giving you a 50% discount. So your premium goes up to £600.

You have the same accident with protected NCD. Your base premium goes up to £1200 but you keep your full 70% discount, meaning your new premium is £360.

It's it worth it? Well, like all insurance it depends on whether you think you're going to have an accident...

Good summary. :beer:

Protected NCD only costs a few £s, so i always pay it - for the reasons in the example above.

motorguy

daveyjp wrote: »

That assumes there is only one insurance company in the UK. Last time I looked there wasn't.

Shopping around after a claim can save you far more than sticking with your current company just because you paid them extra money for extra cover.

They all work on the same principle though, so your advantage with protected no claims carried over after an accident still works in your favour with another company.

I'd rather be plugging in 1 accident and full no claims to a search engine, than one accident and 50% no claims.

Mercdriver

fred246 wrote: »

They always want you to protect your NCB so I figured that it wouldn't be in my interest to do so. I haven't paid it for years.

Any advice by the Freds should be treated with extreme caution.

facade

Joe_Horner wrote: »

But, on my last renewal, the protected NCD cost an extra £3.50 which even I would struggle to describe as a "con"!

Maybe "Con" is the wrong word, but certainly far more profitable for the insurers than the vast majority of their customers




I pay for protected no-claims too. It is a juju- if I stopped paying it I'd immediately have an accident and lose hundreds.

fred246

Sounds like everyone's agreed that the insurance industry make money out of protecting no claims discounts but everyone wants to keep paying it! Very logical.

SHAFT

fred246 wrote: »

Sounds like everyone's agreed that the insurance industry make money out of protecting no claims discounts but everyone wants to keep paying it! Very logical.

Doesn't any successful business with a product make a profit out of selling something?

Aretnap

daveyjp wrote: »

That assumes there is only one insurance company in the UK. Last time I looked there wasn't.

Shopping around after a claim can save you far more than sticking with your current company just because you paid them extra money for extra cover.

That's a different question though. Shopping around is good, but other insurers will have broadly similar pricing structures, even if the exact numbers are different. So you will still get a lower premium with your NCD intact than without.

Aretnap

SHAFT wrote: »

Doesn't any successful business with a product make a profit out of selling something?

And in Fred's world they are all conning you. The only way to avoid being conned is to live in a cave, grow your own food and die at 40, like we did in the good old days before there were dastardly capitalists making money by selling products that people want to buy.