Insurers offer customers the chance to protect their no claims discount. But is it worth it?
Customers who drive claim-free can build up a discount on their car insurance. If you go five years or more without having to make a claim, that discount can translate into a considerable saving.
However, you could lose all that without it being your fault, for instance if your car is hit by an uninsured driver. So is it worth paying extra to protect your discount?
How do I get the discount?
You get a no claims discount for being a careful driver and not being in an accident where a claim is made. It also means you haven’t made any claims to cover the cost of replacement or repair if your car has been vandalised or stolen.
Is it worth protecting?
It depends on your personal situation whether it’s worth protecting your no claims discount.
If you have five years’ no claims discount, it will significantly cut the cost of your car insurance. You could lose all that for just one accident. You would also normally lose your discount for being in an accident with an uninsured driver, if you had to make a claim on your own insurance.
The opportunity to protect that reduction might initially seem like a no-brainer. By protecting your no claims discount, you’ll be locking in that discount. You'll continue to pay less on your premium even if you have an accident. You might still lose your discount if you have a number of accidents in one year though.
The trade-off is that you'll have to pay an additional fee for the protection. It can be tricky to figure out whether buying protection leaves you better off.
If you buy protection for your no claims discount, this will add an extra cost to your premium. But if you have an accident without no claims protection in place, you will lose your discount and end up paying more in future anyway.
The real question is, which will cost you more over time?
Unfortunately, there’s no easy answer here. A lot of the details depend on your driving history and the cost of protecting your no claims discount.
Use a comparison site to check the difference in price for drivers with and without a no claims discount. Then try adding in no claims protection to the quote and comparing this again. This should give you some idea of the difference in price.
Premiums rising regardless
It’s also worth bearing in mind that your premium might go up each year regardless of your driving.
Make a note in your diary to shop around for a new policy right before your current one is up for renewal. This could save you more money than a no claims discount if you find the right provider.
Find an insurer you can trust with Fairer Finance’s tables. Keep an eye out for Ribbon winners. Those who bear a Gold, Silver or Bronze ribbon have happier customers than their rivals.