Each year that you drive without making a claim, you get another year’s ‘no claim discount’ (NCD) (you might have also heard it be called a no claims bonus, or NCB). Over time this can build up to some decent savings on your policy. Understandably, the option to protect this discount is appealing, which is why you can opt to add on ‘protected NCD’ to your motor policy.
However, it’s important to understand what this means for you and your no claims discount. Many drivers mistakenly believe that having protected NCD means the price of your policy won’t increase, especially if a claim isn’t your fault. This isn’t correct. Although this add-on protects your discount, it does not impact the overall premium.
As part of the Know Your Policy series, we’ll explain what protected NCD means for you and how it works with your policy.
Explaining protected NCD
This is an optional add on to your policy. It helps to protect the number of years NCD you have earned. Protected NCD will secure your discount level, not your overall insurance price. It doesn’t stop the price from going up, but it protects the percentage of discount you get.
It’s important to know there is a limit to how many claims this protection can cover in a certain time. At Policy Expert, we allow for two fault claims to take place in a 3-year period per policy.
| No claim discount at the start of your current periods of insurance | Your no claim discount at the start of renewal if you make… | ||
| 0 claims | 1 claim | 2 claims | |
| 0 years | 1 year | 0 years | 0 years |
| 1 year | 2 years | 0 years | 0 years |
| 2 years | 3 years | 0 years | 0 years |
| 3 years | 4 years | 1 year | 0 years |
| 4 years | 5 years | 2 years | 0 years |
| 5 or more years | 6 years+ | 4 years | 2 years |
The impact of claims on your premium
While it protects your NCD, many things can change your insurance price – especially your claims history. This means any claim you make, regardless of who was to blame or how minor (like a windscreen repair), can lead to an increase in your overall insurance cost.
Protected NCD will still help you by applying your discount percentage to the new price, but the total cost of your insurance might still be higher when you renew it.
Key takeaway
Ultimately, protected NCD gives you peace of mind by keeping your NCD safe if you need to make a claim. However, it’s important to remember it’s not a guarantee that your policy won’t go up, as your cost can still increase after a claim. Understanding this will help you to avoid surprises when it comes to renewal.
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