Is protecting your NCD a scam?

akira181

Despite all the news reports of car insurance claims at an all time low due to COVID, my premiums have increased again.  My 2016 1.6L VW Passat was written off last year (third party accepted full liability) and I replaced it with a 2019 1.6L Skoda Octavia Estate, insurance group 15 vs 16 for the Passat.  I understand my new car is, well, newer and therefore a higher book value (approx £13k vs the £6k for the passat) however when I had a 10+ year old 1.4L honda civic, book value of less than £1k, insurance group 13, and no NCD, my premiums were in the £800-£900 range.  So either book value and insurance groups have little weight in premiums or NCD has a significant weight.

All my insurance details are the same apart from reducing my estimated annual mileage from 20,000 business/personal miles a year to 14,000 miles a year, added NCD protection, and an additional year no claims (will be at 4 years on renewal).  My annual fully comp premium last year was £698 with 3 years NCD however the cheapest I'm getting now is around £1,000, some with a black box, from price comparison websites (my current insurer, churchill, will send out renewal quotes next week).

Taking the NCD protection off drops the premium by approximately £300, which would make it slightly more expensive than last year.  A quote with 2 years no claims and an additional claim (fictitious) is also around £1,000.  So if I pay to protect, I pay £300 for the privilege.  I don't protect, have an accident, lose 2 years NCD, premiums increase by £300.  Is protecting your NCD worth it or a scam?

Ant555

I dont think its a scam but its definitely clever marketing and not for me.   
Protected NCD is an opportunity for an insurer to entice you to remain with them at renewal if you have an accident (kind of, insurance on the insurance) - your premiums are likely to increase at renewal due to a claim but 'possibly' not as much if you stay with them. The increased amount for a protected policy is their gamble that you pay them £300 to protect it , have an accident and at renewal you stay with them and they give you £250 worth of discount you wouldnt be entitled to (in that scenario they win by £50) - at renewal they give you £350 woth of discount you wouldnt otherwise be entitled to (you win by £50 over the 2 year term) - Again, all assuming you stay with the same insurer which lots of people do. 

 A protected NCD is not transferrable between insurers but I think you already knew that.

 A protected NCD will protect the discount level with your existing insurer but absolutely will not protect the amount you pay for your insurance premium.

Penelopa.Pitstop

Protecting my NCD costs £16 and £12 on my cars, it's individually listed on my policy.

AdrianC

It's not a scam. It may or may not be worth it for you...

You have had one collision in the last year or so. That makes you a high risk of having another in the near future. That makes the risk they're covering with the protected NCB much higher... so they charge more to do so.

Yes, the other party's insurer paid for that. But insurers know that's as much luck as anything. What if the car that hit you did a runner? Or was uninsured? Then your insurer would have been on the hook...

Petriix

I think once you have maximum no claims it's a reasonable fee of around £10-15 to protect it. The discount itself might only be £150 off the premium, so it's like taking a 10/1 bet that you'll have an 'at fault' claim to help mitigate your potential losses. It's similar to choosing to reduce your voluntary excess at the expense of a higher premium.

maxmycardagain

I protect my NCD, was glad of it twice BUT, you will see premiums rise as you are perceived as a higher risk after you make a claim or have one made against you

I also protect/insure my excess, i have to pay it but get it back, and i have "fault" accident hire car cover

Aretnap

akira181 said:

So either book value and insurance groups have little weight in premiums..

This part at least is correct - they don't.

Insurance groups are largely a marketing gimmick used by people who sell small engined cars. Insurance companies don't actually use them to set premiums, except possibly as a first guess with new models where they don't yet have any data an actual claims to base premiums on. The correlation between insurance group and actual insurance prices is poor.

The value of your car meanwhile doesn't make much difference because the bulk of the price of car insurance comes from third party risks. Your insurance company wasn't charging you £800 because they were worried about the cost of replacing a 10 year old Honda Civic - they were charging that much because they were worried that you might paralyse someone for life, leaving them with a bill for £23 million. You're just as likely to do that in a 10 year old Civic as in a brand new Octavia; in fact you're probably more likely to do it in the 10 year old car because an old car is more likely to be in poor mechanical condition, and won't have modern safety features.

justworriedabit

Penelopa.Pitstop said:

Protecting my NCD costs £16 and £12 on my cars, it's individually listed on my policy.

which insurance co is that?

justworriedabit

akira181 said:

Despite all the news reports of car insurance claims at an all time low due to COVID, my premiums have increased again.  My 2016 1.6L VW Passat was written off last year (third party accepted full liability) and I replaced it with a 2019 1.6L Skoda Octavia Estate, insurance group 15 vs 16 for the Passat.  I understand my new car is, well, newer and therefore a higher book value (approx £13k vs the £6k for the passat) however when I had a 10+ year old 1.4L honda civic, book value of less than £1k, insurance group 13, and no NCD, my premiums were in the £800-£900 range.  So either book value and insurance groups have little weight in premiums or NCD has a significant weight.

All my insurance details are the same apart from reducing my estimated annual mileage from 20,000 business/personal miles a year to 14,000 miles a year, added NCD protection, and an additional year no claims (will be at 4 years on renewal).  My annual fully comp premium last year was £698 with 3 years NCD however the cheapest I'm getting now is around £1,000, some with a black box, from price comparison websites (my current insurer, churchill, will send out renewal quotes next week).

Taking the NCD protection off drops the premium by approximately £300, which would make it slightly more expensive than last year.  A quote with 2 years no claims and an additional claim (fictitious) is also around £1,000.  So if I pay to protect, I pay £300 for the privilege.  I don't protect, have an accident, lose 2 years NCD, premiums increase by £300.  Is protecting your NCD worth it or a scam?

If at all possible, please be very, very cautious when going for a "black box" as someone had an accident when someone pulled out in front of them on a main road with a 30mph limit and there was a massive claim the car on the main road was travelling a lot faster than 30.  That driver had a black box fitted it was nowhere close to the 50mph but actually 40mph. I would not recommended a black box unless you are a newer driver and it massively reduces costs.

It's easy to stray over the speed limit in 20/30mph zones at times and in 20 zones we use the speed limiter or cruise control helps me to concentrate more on the road

AdrianC

Aretnap said:

akira181 said:

So either book value and insurance groups have little weight in premiums..

This part at least is correct - they don't.

Insurance groups are largely a marketing gimmick used by people who sell small engined cars. Insurance companies don't actually use them to set premiums, except possibly as a first guess with new models where they don't yet have any data an actual claims to base premiums on. The correlation between insurance group and actual insurance prices is poor.

The value of your car meanwhile doesn't make much difference because the bulk of the price of car insurance comes from third party risks.

Which is the same reason insurance groups play a small part...

Groupings are calculated by the industry looking at the repair cost for various standardised impacts. Expensive repair? High group. Cheap repair? Low group.

But, as you say, repair cost to YOUR car is not a major factor.

As far as NCD %ages go, my insurance renewal last year gave the actual %ages...
https://forums.moneysavingexpert.com/discussion/6094792/ncb-percentages

flashg67

My latest 'Quote me happy' (Aviva) policy says 'You have purchased NCD protection. This has increased your premium by £12.61.'