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No claims discount
By nealejames | February 23, 2007
Please, please, please, could someone explain how the no claims discount system works in car insurance? A definitive answer would be appreciated, as the few brokers I’ve talked with today have very differing accounts. The way it was told to me today was as thus: say your car insurance costs £100 per year. Huh, chance would be a fine thing, but for the sake of this story it works. Say your no claims discount is the full 65%. Simple mathematics at this point suggests that your insurance per year would therefore be £35. Everybody’s happy, job done. Now, what if you had a prang through no fault of your own, and because this is a simple world example, the guilty third party claimed full responsibility fairly and squarely. Your own policy isn’t affected, and so upon renewal, you may expect a smallish rise to take into account the climbing cost of living, but otherwise, it shouldn’t be a drama. For this example then, it’s gone to £120. The 65% discount, takes the final payment down to a renewal of £42. But this is where it gets confusing. Apparently your policy IS affected, even by a no fault claim, so it’s likely that your policy could rise to say £200, purely because you had the audacity to require some service for the money you pay each year. “But…” I argue, “I have a protected no claims discount. And, this was a no fault of my own ding. Surely my policy should just have it’s normal cost of living rise?” (Silence whilst broker scratches head or other parts of his anatomy.) “Yes, but you still have your 65% discount. That’s the full amount.” (Pause for thought.) “But,” I add, “now my policy is costing £70 instead of £42?! Could you explain how my protection protected me from an accident that was, and I repeat Your Honour, no fault of my own and was fully recovered from the third party? Doesn’t no claims protection mean unequivacle, brick wall, Evo Stick glue like, no probs mate, bullet proof, can’t catch me you’re it and you smell, Hands Up if you use Amplex, sure fire safety of paying no more in the event of some half wit driving into the back of you just before Christmas? Or am I wrong?” There was a deafening silence at the end of the blower. I was half expecting a voice to retort; “Computer says no.”
Topics: Blog journal |
February 27th, 2007 at 5:05 pm
Now you see this is where you make a couple of inaccurate assumptions.
Firstly that Insurance is Index Linked to the rate of inflation. Unfortunately this is not the case, along with so many other items that affect how many pounds we are left with in our pocket, otherwise the governement would have great difficulty in convincing everyone that the Rate of Inflation is a artificailly as low as they claim.
Secondly you assume that life is fair, unfortuantely this is not the case either.
But in a vein attempt to explain.
Base Rate i.e Age of Driver, Age of Car, Car Group Post Code = £100
Insured and spouse only driver discount @ 15% = -£ 15
Sub Total (EASY) = £85
Garage Overnight Discount @5% = -£4.25
Sub Total (OK MAKES SENSE) = £80.75
Anti Theft Device Thatcham Class 2 @ 10% = -£ 8.07
Sub Total (GETTING BORED NOW) = £72.67
No Claims Discount @ 65% =-£61.77
Sub Total (PUT KETTLE ON) = £10.90
Insurance Premium Tax at 5% = £ 0.55
Fianl Premium (LOST THE WILL TO LIVE) = £11.45
Worth noting until your the claim is finally settled between the two insurers you NCB may be suspended. Its one of the legla things, also the base rate will have been adjusted, not because of your inability to predict someone driving into you but because insurance rates are adjust thrgouhout the year based on the number of claims received in total. Its the many paying for the few, trouble is these days with litigation going as it is the few have become many and all their solicitors want big settlements and big fees.
See simple really.