Running A Car - Protected no-claims – is it worth it?

Any driver who goes one year without making a car insurance claim will be rewarded with a 'no-claims discount' that can reduce the cost of cover by around 65% after five years.

However you will lose that discount should you make a claim – unless you have taken out 'no-claims discount' protection.

Research from MoneySupermarket.com shows that drivers making a claim could see their premium rise by 40% if their no-claims discount has been left unprotected.

A driver who has protected their discount, on the other hand, would see their premium rise by only 11%.

With most insurers adding between 10% and 20% to the annual cost of your policy for protection of this kind, is it really worth it?

How can I work it out?
You can choose to protect your no-claims discount only once you have been driving for five years without making a claim on your insurance.

The more claim-free years you build up, the more you have to lose by not protecting the discount you have accrued.

However, remain claim-free for the following five years, and protecting your discount by paying more could mean you miss out on the incentive your insurer awards you for being such a model customer.

Bear in mind that protecting your no-claims discount generally adds about £30 to the cost of the average annual policy. Over five years, that’s an extra £150.

What else do I need to know?
When deciding whether or not to protect your no-claims discount, it is worth knowing that choosing not to take out protection does not mean you will lose the entire discount in the event of a claim.

Instead, you will usually lose the equivalent of two-years' discount for each claim.

You should also take the time out to read through your insurer's small print because some providers view protecting a no-claims discount in a different light to others.

Some car insurance companies may permit policyholders to make more than one claim on a protected policy, while others will limit the amount of claims you can make before the protection becomes invalid.

As you can take your no-claims bonus with you when you switch to a new insurer, it's also very important to shop around to find the best deal for your needs every time your policy comes up for renewal.

Insurers do not reward loyalty, and you may even be able to get no-claims discount protection included for the same premium that your current company wants to charge you without it.

This article has been researched and written by whatcar.com's car insurance partner, MoneySupermarket