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To protect or not to protect your no claims discount?

14th February 2012 Print

Drivers making a claim on their motor insurance policy, with an ‘unprotected' no claims discount (NCD), could see the cost of their premiums increase by around 37 per cent, according to research by

The price comparison site investigated the cost of protecting or not protecting your NCD for a standard scenario. The research reveals if a policy holder who had five years ‘unprotected' NCD made a claim they would see premiums hiked from £349 to £479, an increase of £130, or 37 per cent. However, motorists with five years protected NCD making a claim would only see a three per cent increase, or £10 - from £382 to £392 - to the cost of their annual premium.

Pete Harrison, car insurance expert at, said: "Building up your no claims discount over a number of years, can be a valuable commodity and can significantly reduce the cost of your premiums.

"Having reached the five year no claims discount level, many motorists will be reluctant to take the risk of losing it and may consider paying extra to protect it. With premiums on average rising by 37 per cent if you make a claim, paying extra to protect your policy against this sharp hike might be worthwhile. But be warned, if you protect your policy but don't make a claim for a number of years, you could find that you are eroding any potential savings."

Tipping point: Protected NCD vs Unprotected NCD

Motorists looking to ‘protect' a five year no claims discount (NCD) will pay an extra £33 on average on top of the cost of their annual car cover, however this varies significantly between providers.

The longer a motorist protects their NCD and doesn't make a claim, the less cost-effective it becomes. For example, in the first year, a motorist who protects their five years NCD, and makes a claim will be £54 better off on average, compared with a motorist who made a claim on an unprotected policy. However, because of the £33 annual cost to protect your NCD, if you haven't claimed until the second year, you will be £21 better off.

The tipping point comes in the third year; if you finally make a claim, you will have paid £12 more compared with someone who didn't protect their NCD and claimed, and in the fourth year, you will have paid £45 more.

Pete Harrison said: "If you are looking to protect your no claims discount, shop around for the best deal available for your circumstances. MoneySupermarket can help you save £400 on your car insurance and if you do find a better deal with another provider, you can take your no claims bonus with you.

"It's crucial for motorists to understand the additional fees for protecting a no claims discount depends on your personal circumstances and motoring history, as well as the provider. Furthermore, it's worth motorists remembering it is the discount they are paying to protect, not their premium - so if you do make a claim, it may well increase the amount you pay for your cover anyway."

The research also reveals there are vast differences in the small print between motor insurance providers for protecting a NCD; some providers will allow multiple claims on protected policies without penalty. In addition motorists will not lose their entire NCD if it is not protected and they make a claim - generally they would lose two years NCD.