Paying for no-claims protection may not protect you after all

Your no-claims discount is a key way to save money on your car insurance or van insurance, and while it seems like a foregone conclusion that it’s a safe bet to pay a bit extra to protect it – but new evidence has emerged that even if you purchase no-claims protection, your rates might still go up after an accident.

Motorists pay around 10 per cent extra on top of their annual premium payments in order to safeguard their no-claims discount. The lion’s share of drivers are more than happy to do so, as the ¬£70 or so on average that they pay to preserve their bonus is a small price to pay for a deep discount of as much as 90 per cent off in some cases, but insurers are finding a way around this in an insidious way.

Some customers are finding that the amount they pay to their insurers has gone up at renewal after they’ve been involved in an accident, regardless of whether they were at fault or if they pay for no-claims protection. Insurance companies will honour their agreement to leave a no-claims discount intact, but will instead simply change your rates before the discount is applied, sometimes resulting in increases as high as twice what drivers were paying the year previous.

The loopholes such as these that insurers exploit are necessary, insurance providers say, in order to recover their costs incurred by rapidly rising accident claims figures. In fact, the number of claims being made where bodily injury is present rose by 18 per cent last year, even as the number of accidents reported dropped by 11 per cent, and industry experts say that disreputable claims management companies are driving up costs for the insurance industry by encouraging spurious accident claims.

But even drivers who have not been in an accident and have protected their no claims are being hit by soaring premiums. Typically, someone who has driven for a year without a claim will get a discount of 30 per cent, rising to 40 per cent in their second claim-free year.

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