For every 10 drivers out there, 4 prefer to pay for minor damage rather than claim off their insurance policy, lose some of their no claims bonus (NCB) and have their driving record blemished.
That’s ok, it’s individual choice. Some of these people will even have NCB Protection so that in the event of a claim, they will maintain the same level of no claims bonus!
Protected NCB is a useful tool, normally only available to those that have earned the maximum bonus entitlement from their insurer, but it comes at a cost, and is it really worth it?
Premiums are normally hiked somewhere between 10% and 15% if you want to protect your bonus. In the event of a claim, you will usually lose 20% to 25% no claims bonus (2 to 3 years worth) at next renewal.
It will take 2-3 years to get your no claims bonus back up to the maximum following a claim, so, for example, in real terms this means:
• Annual premium £350 (Full premium £1000 less 65% NCB)
• Cost to Protect NCB = £402.5 (15% extra)
Renewal Premium following claim:
Year 1
• Annual premium if didn’t have Protected NCB at last renewal would be:
£550 (£1,000 less 45% NCB)
• Annual Premium if you did have Protected NCB:
£402.50 (£1,000 less 65% NCB plus the 15% additional premium for Protected NCB)
Year 2
• Annual premium if didn’t have Protected NCB: £450 (£1,000 less 55%)
• Annual Premium if you did have Protected NCB = £402.50 (£1,000 less 65%)
As you see, the person that didn’t have Protected No Claims Bonus at the time of the claim ends up paying £1,000 in premiums over the 2 subsequent years whilst the person that did have Protected No Claims Bonus pays only £805 representing a saving of £185.
This of course, does not take account of any premium increases, loading applied (if any) by the insurer due to the claim (this is very much dependent on the nature of the claim).
If there had not been a claim, the reverse of course applies:
The person that had Protected NCB will have paid £1,350 over the 3 years whilst the person that did not have Protected NCB would have paid a mere £1,050 saving £300!
It really is a matter of choice; you pay your money and take your chance!