Protected NCD

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crockers

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I read on here people saying they are making a claim and it won't affect their protected NCB. Let's put this right
Firstly it's a Discount not a Bonus.
Secondly a claim (if unrecoverable) WILL affect your renewal.

For example. Let's say your annual premium is £1000 and you have a 60% protected NCD so you pay £400. You make a non recoverable claim.

Upon renewal your base premium WILL be loaded - let's say 20%. Your new base premium is now £1200 upon which your protected NCD of 60% is applied. So your new premium will have gone up to £480.

If you decide to transfer your business you have to declare the claim. You will very unlikely be granted full NCD so you may well find yourself stuck with your existing insurer (who knows this when quoting renewal).

I just wanted to make everyone aware that a protected NCD isn't protecting the premium only the DISCOUNT.
 
Quite correct and something misunderstood by many.
 
Thanks for the explanation:thumb:, I’ve not used a protected scheme and I wondered how it worked.
 
A very clear and concise post, but the following point may be innaccurate :-

"If you decide to transfer your business you have to declare the claim. You will very unlikely be granted full NCD so you may well find yourself stuck with your existing insurer (who knows this when quoting renewal)."

Protected NCD does what it says on the tin - at renewal the number of years NCD should remain at what it was at the previous renewal and most insurers will honour it.
 
OK - hands up: I used the term NCB, although oddly I would probably have referred to it as a discount had I not used the abbreviation. I've never really thought of it as a bonus, but NCB somehow sounds a lot more familiar than NCD.

However, I do appreciate that a) it's just the level of NCD that is being protected and b) there's no obligation for another insurer to honour this (though I accept that they usually will). The problem is that there's no cross-industry consistency about these schemes: I've been in the situation where I had, say 10 years NCD but switched to a company whose system only catered for up to 5 years. Even with the same company, I believe they can opt to adjust the amount of discount offered for a particular number of claim-free years. The bottom line is that your decision needs to be based on the premium you pay and the service you get for it.

I also mentioned in my recent post that my insurer has a policy of not increasing your premium just because you've made a claim, which I saw as being quite separate from the NCD. However, having checked the policy wording, what it actually says is that they won't cancel your policy just because you've made claim, so I clearly got that bit mixed up. Having said that, I've had a renewal since the claim I referred to, and there was no significant difference from what I'd paid the year before.

One thing I did notice when checking the policy document, though, is that it consistently refers to the discount as a "no claims bonus"... ;) I suppose it's a bit like people referring to Vehicle Excise Duty (VED) as Road Fund Licence (RFL) or car tax.
 
Why would another insurer honour the discount earned by the original insurer?
 
Why would another insurer honour the discount earned by the original insurer?

To meet customers' expectations and win their business. But the rub is that they're only honouring the number of years, not necessarily the associated discount percentage.
 
new insurer asks for proof of NCD , and normally honours it, ive never had it refused, and my premiums most years have been lower, totally ruining the theory above!
 
New insurers will honour the number of years NCD but against THIER premium..
 
Whitenemises is correct. The base premium should reflect your claims experience. It is uponthis that any NCD is applied. Obviously not all insurers act in the exact same manner but remember the basic rule of any insurance product when calculating a premium.
"the insured should pay a premium comensurate to the risk he brings to a common pool of risk"

But of course it always pays to shop around, and it always depends how much a company's wants your business.
 
Two other things to rememer about NCD -

1) If you do not have protected NCD and you have a fault (or open) claim at renewal time, your insurer will step back the NCD by 2 years from their maximum.
So if their maximum discount is for 4 years then they would only give proof of 2 years, no matter how many years you have actually earned.

2) Before getting any quotes at renewal time ensure that you know how many years NCD proof your insurer will be willing to send to you.
You may think that you have e.g 9 or more years NCD and ask for quotes based on that, but if your previous insurer only confirms their maximum of, let's say, 5 years the new insurer may well charge an increase in the premium offered in the quote when NCD is confirmed at less years than the quote was based on.
 

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