When misfortune rains on motorists, no claim

Many drivers will pay for repairs themselves rather than get their insurer to foot the bill. Clare Francis looks at cover that won't compromise your bonus

Most motorists know they can often drive down the cost of their car insurance by scouring the market for the most competitive deal. But all that rigour will go out of the window if, once you've found a policy, you decide not to call on it in your hour of need.

Most motorists know they can often drive down the cost of their car insurance by scouring the market for the most competitive deal. But all that rigour will go out of the window if, once you've found a policy, you decide not to call on it in your hour of need.

That's the case with many drivers, who worry about the fate of their no-claims discount (NCD) or bonus (NCB). Most insurers offer a reduction on premiums to people who haven't made a claim on their insurance. This discount rises every year you don't claim, up to a maximum of 65 or 70 per cent, making a big difference to the premium.

But fear of losing this discount is putting a lot of drivers off claiming. New research from insurer More Th>n has found that 43 per cent of motorists would pay £200 or more on car repairs, rather than claim on their insurance, to ensure they don't lose their NCB. And in London, nearly 30 per cent of drivers would pay more than £500 out of their own pocket before making a claim.

Typically, depending on the insurer, you lose one or two years of discounts if you claim, and you run the risk of your premium increasing. Many drivers, therefore, don't think there's much point in making a call on their policy unless it's for a substantial amount. And they could be right. "If it's only for £200, it wouldn't be worth it, particularly if the no-claims discount isn't protected," says Russell Byrne, private motor product manager at AXA Insurance.

Most insurers offer customers the option of protecting their NCD, although this will increase the premium and you usually need at least four years' no-claims before you're be eligible. However, paying the extra could be worth it.

"If you make a claim, [your NCD would] step back two years, which would mean your discount is cut by about 20 per cent," says Richard Alger, market development manager for private motor insurance at Norwich Union. "If you live in a large city and are in the highest premium bracket, a 20 per cent increase can make a big difference to the cost."

But the terms of these guarantees vary, so David Pitt, motor insurance manager at More Th>n, recommends that you check the wording of the policy. More Th>n and Eagle Star both offer eligible customers bonuses for life, so regardless of how many claims you make, your NCD will not decrease.

But with most insurers your NCD is protected only for a certain number of claims (see the table above for details). Another result of making a claim is that your premium will go up, and most protected NCD policies don't offer cover for price hikes.

"We can't guarantee premiums," says Kathryn Pugh, spokeswoman at Eagle Star. "As a driver you represent a risk and your premium is calculated on this. If you have one claim, it doesn't really change your risk, but if you have a number, your risk profile would change and your premiums go up."

As part of its lifetime guarantee, More Th>n also ensures that your premiums won't be increased as a result of a claim. It believes that the fact most insurers don't do this is another reason why so many drivers would rather pay for repairs to their car out of their own pocket.

"It's a crazy situation when people are paying for car insurance and then not claiming for fear of losing their bonus," says Mr Pitt. "If you do have an unfortunate mishap, submit a claim. We're saying we will not increase your premium or reduce your no-claims bonus, and we've given that commitment contractually."

However, other insurers don't think this is a big issue for motorists. "The overriding factor for people is whether they want comprehensive cover or third party, fire and theft," says Craig Staniland, group head of motor underwriting at Churchill. "The level of NCD, and whether it's protected, and the excess are considerations, but I think these do play second fiddle to price."

Mr Staniland says he would interpret More Th>n's findings differently: if 43 per cent of drivers would be happy to spend £200 on car repairs rather than claim on their insurance, they should increase their excess. The standard level of excess varies depending on the insurer, though it tends to be around £120. But if you opt for a higher level, your premium will be reduced. So if you wouldn't make a claim unless it was for a substantial amount, it's well worth increasing your excess.

Insurers that don't offer bonuses for life also argue that their claims experience shows the protection they offer is adequate, as most people make a claim on their car insurance only once every four years or so. And they ask who will meet the cost of claims if the customer's premium is guaranteed.

"If a driver keeps having accidents, someone has got to pay for it," says Emma Holyer, a spokeswoman for Direct Line. "So if it's not that particular driver, surely all the other customers must somehow be subsidising them."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
    Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

    Laughter, but no tears, as Letterman takes his bow after 33 years

    Veteran talkshow host steps down to plaudits from four presidents
    Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

    Hozier's 'blasphemous' song takes Novello award

    Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
    Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

    Join the tequila gold rush

    The spirit has gone from a cheap shot to a multi-billion pound product
    12 best statement wallpapers

    12 best statement wallpapers

    Make an impact and transform a room with a conversation-starting pattern
    Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

    Paul Scholes column

    Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?