Is it worth protecting your no claims discount?
Published Wed, Jan 15, 2014 Updated Tue, Feb 16, 2021
Protecting your no claims discount is a tricky subject and there are certainly a few pros and cons. Many people point out that if you have a protected no claims bonus and you have an accident, your premiums the following year will almost certainly be significantly higher.
The counter argument to this point is that if this does happen, you will be paying less than you would if you had no discount at all. So the question really is what do you actually save? You can get a very rough estimate by simply getting a quote but with a hypothetical claim and try varying the no claims discount to see what effect it has. You might be surprised by the results.
Would you lose your no claims anyway?
Some people think that if you have a claim you lose your whole discount if it’s unprotected, but the truth is that you don’t necessarily lose all of it. In general, if you have 6 years or more, so after making a single claim in a year you will have 4 years no claims to use the next year. It is worth looking up how your no claims discount would be downgraded; the difference in price between 6 years and 4 years is very small, whereas the difference between 4 years and 2 years is much larger. Of course, if you have an unlucky year and make 2 or 3 claims, you can lose a 10 year no claims bonus altogether. It is unlikely to happen of course, but you should make sure you know the potential costs just in case.
What does it cost?
The cost of protecting your no claims bonus will also vary, so make sure you test both scenarios. In general, it will cost between £40 and £80 to protect. It is up to you to decide whether this amount is worth the risk. Protecting your no claims is certainly expensive and probably overpriced, but the potential costs can be high, so you need to weigh up the risks for yourself.