How Does The No Claims Discount System Work?

Accumulating several years of no claims motoring is one of the best ways to get your insurance cost down.  However, it doesn’t always work in the way that you may think it does.

If you’ve already built yourself up a collection of 5 or more years of no claims insurance, then you should be enjoying a good discount on your car insurance premium. It should actually be in the region of between 70% and 80%.

Surprisingly, each insurance company dances to a different tune when it comes to no claims discounts. This can cause confusion to those who do have to make a claim.

Counting the cost of making a claim

Unfortunately NCD deductions can be horribly disappointing. Even drivers who  have as many as eight years with no claims can have them cut to just 3 years when they make a claim. A far bigger drop than you may expect.

Right across the industry, the norm is to deduct two years of no claims discount if you make a claim. Upon renewal, some companies will drop the NCD to just 3 years that are taken into consideration even when you have saved up 8 years of them. According to the ABI (Association of British Insurer) this is an option that is purely at the discretion of each insurer and as the insurance market is so competitive, it makes sense to shop around for the best quote.

Looking at insurers, it looks like Allianz offers the best situation in that at the time of publishing they are offering to remove just the 2 years of NCD after a claim and will stand by this at renewal by offering 6 years of discount. They will consider up to 9 years NCD at maximum – which is a good number compared to other insurers apart from Aviva – who will go up to 15 years. However, Aviva will only give 3 years NCD when you renew after making a claim. For those who qualify there is an unlimited number of No claims years that Saga insurance will consider.

Our advice is to shop around and to protect your no claims discount. But keep in mind that if you drive without making a claim over a number of years, it will not be a cost effective to have paid out for the discount. But better safe than sorry and seeing as none of us can predict the future, we think it’s a wise move to protect it.

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