New rules have come into place which mean that brokers, like Think Insurance, must make you aware of what NCD Protection actually is and how it works.

What Is An NCD?

An NCD/No Claims Discount (or sometimes known as No Claims Bonus) is a reduction in the yearly insurance premium, which is usually implemented at renewal, when you haven’t made a claim in the previous year’s period of cover.

NCD Protection

NCD Protection is an additional level of cover you can purchase when renewing or buying your insurance policy, allowing you to make a certain number of claims (varies from insurer to insurer) per insurance period without affecting your NCD. However NCD doesn’t always work like that, which is why there are new rules for insurers and brokers to explain exactly how it does work.

What Should You Be Told?

As part of the CMA Private Motor Insurance order, which came into effect on Monday 1st August 2016, you should receive the following information in written or oral form:

• Communication that protecting your NCD does not guarantee your premium will not increase.
• A step back table showing the number of years’ NCD you have earned and the effect a claim has on your NCD years with and without NCD Protection.
• A table which shows the average percentage that each year of NCD equates to on the insurer’s scale.
• The difference in retail price between purchasing NCD Protection and not purchasing it.

NCB Protection Statement

“No claims bonus protection varies between insurers but in general it allows you to make one or more claims before your number of no claims bonus years falls (further information will be provided when you select a policy and proceed with the purchase of the policy on the provider’s website). No claims bonus protection does not protect the overall price of your insurance policy. The price of your insurance policy may increase following an accident even if you were not at fault.”

Do I Need To Know?

If you have taken out a private car insurance policy for Social, Domestic and Pleasure purposes, then you should be informed. If it’s a motorcycle, motor caravan or a vehicle over 3.5 tonnes, then this doesn’t apply to you, likewise if you’ve taken out a commercial vehicle policy, the vehicle is used primarily for business purposes or the policy is in a company name.

Why Is This Being Introduced Now?

The results of a recent Competition & Markets Authority survey highlighted that NCD Protection is one of the most commonly purchased insurance add-ons, but consumers in the survey misunderstood the level of protection it provided, leading to the conclusion that consumers weren’t being given enough information to assess the benefits that NCD Protection provides, compared to the cost.

Insurance And No Claims Discount

If you want to discuss whether Protected NCD is right for you, then make sure you speak to your insurance broker when your policy is due for renewal. If you’d like to find out how No Claims Bonus could impact your car insurance, young driver insurance or convicted driver insurance policy with Think, then call us on 0800 221 8061 or click Get A Quote below.

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