Sometimes it pays to not preserve your no claims discount

According to one car insurance comparison site, sometimes you can actually save yourself some money in the long run if you choose not to protect your no claims discount.

The provider of discount car insurance quotes says that in the event that you decide not to preserve your no claims discount, your car insurance rates could increase by as much as 37 per cent.  However, the website pointed out that the longer you go without without taking advantage of your no claims discount, the benefits of preserving it begin to diminish, and ignoring your no claims discount by not preserving it can result in an average savings of £33 every year when you renew your insurance cover.

According to the website’s research, policyholders with an ‘unprotected’ five years’ worth of no claims discount would see their insurance costs raised to £479 from £349 upon making a claim.  The £130 rate hike equates to a 37 per cent increase in rate costs.

However, the same motorist which protected their five-year no claims discount would only see an increase of £10 – or three per cent, to £392 from £382 – in the event of having to make a claim.  This means that, according to the research findings, protecting your no claims discount without making a claim will slowly use value over time, with the best course of action being to protect your discount for the initial two years, with the third year depending on whether you make a claim or not.

According to one insurance specialist who commented on the survey findings, you can reduce your premiums by a significant amount by building up your no claims discount over several years.  However, you risk the erosion of your savings by paying more to protect  your discount the longer you have it, the expert warned.

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