Protecting your no claims discount – is it worth it?
As a private or public hire driver, boasting a hefty no claims discount can almost be a badge of honour. By accumulating it over the years, the bigger your bonus gets, the greater your reputation as a safe driver.
If you’re not familiar with a no claims discount, first of all, where have you been hiding?! Your no claims discount (or no claims bonus for some) allows you to effectively reduce the cost of your annual insurance premiums, based on your driving history. Never been involved in an accident or needed to make a claim – the percentage of your discount goes up. Simple!
What if you do end up having to claim, though, even for an incident that’s not your fault? To make sure that your accumulated discount isn’t affected, many drivers have added no claims protection to their policies. Here, we look at just how beneficial that little extra can be.
Why protect your no claims?
Your accumulated no claims works as a percentage discount. By adding protection to your no claims, you effectively lock that percentage down, keeping it from dropping after an accident. Of course, it’s still possible for your discount percentage to increase over years of not claiming.
Adding the protection could ultimately save you loads should you ever need to make an insurance claim. It’s likely that your insurance premiums might still be affected by a previous accident so keeping a higher discount in place could make a huge difference.
Is it for everyone?
No claims discount protection is certainly beneficial for newer drivers, or those starting a new insurance policy from scratch. It can help to keep that discount rising while premiums slowly drop over the years. However, after a certain point, some drivers have found it be more of a hindrance than a help.
After several years of no claims, your premiums may fall to a low enough level that added protection might not be as cost-effective as it once was. The annual cost of the protection service could even end up costing you a little more than if you were to make a claim!
The tricky thing with this is that there’s no real set point for this. As your own prior costs and driving history will shape your personal premiums, it really comes down to you to decide when it may be best to remove the protection from your no claims discount. Generally, it’s worth reviewing your total insurance costs after about 5 years to see how everything adds up. Before then, however, protecting that no claims discount seems to be the recommended way to go.
For competitive premiums and advice on taking out no claims discount protection, get in touch with Freeway today. Call us on 01928 520 521 or get a quote online.