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Anyone else come across this? Applying for insurance I am told by an insurance broker that No Claims Discount lapses after 2 years, i.e. a break of more than 2 years in insuring a vehicle takes you back to a full premium without discount.
I shall not be amused if I buy another motorbike after a gap of 3 years to find that instead of 6 years' NCD I am on an undiscounted premium.

I lost my 5 years NCD after not having a car for 3 years, I was most unhappy when I did buy a car again.

Yep, it's another great little con by the insurance companies I'm afraid.

I can think of no logical reason on earth why NCD should "expire" if unused. In fact I'd love to hear a "justification" for it by someone working in the Insurance trade.

We very nearly got caught by this one when we had a couple of years of only having one car. When we subsequently bought another for my wife the insurance company picked up that it was 2 years and 1 month since her previous policy expired and tried to disallow her 65% NCD. In the end I was able to persuade them to apply some discretion and allow her entitlement to count, simply by threatening to go elsewhere. Not sure whether we'd have done any better elsewhere but it did the trick!

It's definitely something to keep a very close eye on, as 2 years comes round very quickly, and the cumulative loss of 5 years no claims could run into thousands. A friend of mine has kept his wife's NCD entitlement valid for nearly ten years now, just by alternately insuring their single car in each of their names, a year about!

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NCD is allowed by reference to the absence of claims by or on account of a person to whom the insurance industry has underwritten a risk of claims. If there has been no exposure to claims, a no claims history is not the same as it would be if there had been an exposure to claims. On a risk analysis basis, it doesn't seem unreasonable.

One could, perhaps, argue that the no claims history should reduce (for NCD purposes) a year at time, rather than completely after two years without cover, but it clearly has to have some sort of shelf life.

Nice try, but I'm still not having it! The "exposure to claims" hasn't disappeared has it? If I've got 5 years NCD then I've been "exposed to claims" for 5 years without having one, what difference does it make how long ago that was?

Remember this has nothing to do with "risk" as such. If the insurance company feels that a driver's lack of practice for (say) 3 years increases their risk then they should by all means place a loading on the basic policy to reflect that, but not remove NCD entitlement. Indeed in most cases the driver won't actually have stopped driving, so it's nothing to do with "risk" as such. My wife had driven our car pretty much every day in the 2 year "baby break" she had, so how can her risk suddenly double in her own name yet not qualify her for a loading on my policy?

NCD is purely about having a proven track record of avoiding claims. How can it "expire"?

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NCB is used by the industry to attract low risk (by offering attractive costs) and punish bad risk, which they are averse to, by levying a high cost.

To be most accurate, the risk is measured on current data. Drivers and driving changes over the years, As you might expect, stale data reflects the driver's risk in former times, not the current risk of the driver in his or her current state.

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It's a track record of engaging in activity which carries risk without any loss materialising. If a person hasn't engaged in the activity, there is no possibility of a loss materialising. If the track record is less recent, it's less significant.

Maybe the risk activity was continued on another insurance but that policyholder then benefits (or not) from the additional driver's track record. NCD can only accrues for a single driver on a single vehicle. If two or more drivers of one vehicle, they can't all claim the NCD.

Perhaps the answer is to buy a wreck and keep it insured at minimum cost to maintain the NCD?

Logically, if the person hasn't engaged in the activity then that shouldn't worsen their previous record. For the Ins. company to claim that the NCD record diminishes because of lack of exposure is exactly as logical as the driver saying their NCD risk should improve because they haven't had a claim!


Ah. But if my wife had an accident in my car during her sabbatical, it would adversely affect her insurance rating when she next took out her own policy (as well as losing her no claims by default). So they already have a mechanism for penalising a driver who drives on another policy but not one for rewarding them.

The only notion that makes even a slight modicum of sense is that of the conditions under which the NCD was earned becoming less relevant as the years go by. But how accurate is this? My wife drove for c. 10 years claim free, so is it fair to say that this "claim avoiding ability" completely dissipates during just two years of driving on someone else's policy.

Sorry, but I think this is just another typical "Insurance small print" method of extracting money from us, the same as the way that part-year policies aren't charged pro-rata, the same as the way that non-fault drivers with total loss claims lose the remaining part years cover without any refund, the same way that NCD stops counting up at 5 years, yet still counts down when you have a claim - how can a driver with 25 years NCD be penalised as heavily for a single claim as one with just 5?

I remain convinced that one of the basic problems with insurance companies is that they introduce the notion that it is perfectly reasonable to employ dodgy business practices such as this. Is it any wonder that their customers then have so little compunction towards defrauding them in the event of a claim, in order to try and redress the balance?


Or better still just insure someone elses unused old wreck for them. Which exactly demonstrates my point that it's all a game, doesn't it? It is ok to go and insure a "wreck" and expose it to zero risk in order to build up NCD, yet in reality this is no different to the situation of not having a policy at all, except that the Ins. Company is getting some money for nothing in the meantime!

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Yes. Even an old, broken down moped in the back of the shed, with a 3rd party only policy, can keep you current on a 1000cc bike! It goes to show how roughly insurance companies assess risk.

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The point is that "rough assessment" works perfectly for them as long as their approximations err on the side that favours them, on average.

For example, I bet that for every "returning" megabike customer to whom they give NCD back to because of the "sleeper moped" in the garage, there are ten others who've inadvertedly lost all their NCD through not realising how to play the game.

To put it bluntly, if they made the system more logical and intelligent it would reduce their profits. "When ignorance is bliss, 'tis folly to be wise"!

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Have I touched a nerve?



I can see how the vicious circle develops. There are many people who believe they are 'entitled' to claim from time to time - probably the same people who think they are 'entitled' to some paid sick leave when they're not actually sick.

I don't feel sorry for insurance companies - probably many of their problems are of their own making. But, if you look at performance, they are not/have not been massively profitable businesses so the charge of dodgy business practices, if true, has not exactly generated vast profits for shareholders.

Yep - after having a company car for years , then being on dole for a couple of years had same probs - couldn't use proof of company car driving.
However, did get a bit of advice from a broker - if you've got a few years accident free record( they took my word for it , but think that insurance companies keep records anyway- so why ask for proof then) and a clean licence with a few years on it - i managed to shop arround and bargain a decent "starter" bonus of about 60% - worth trying -does work , just got to find right insurance company.

<nods vigorously>

I just can't think of another profession which employs such a wide variety of shady business practices, and has such scant regard for ethics. I can't think of any occasion where I've dealt with an Insurance Company without being conned or lied to. The fact that much of what they do is legal doesn't make it any more ethical.

Set against this I've never made a false or fraudulent claim, nor lied to them, so I'm afraid I'm claiming the moral high ground and I'm damn well staying there!

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A friend had this problem, some insurers will let it slide but you need to call around and ask. I think Tesco was one of those who did.

Gareth

Shop around. You may find an insurer who will allow you to keep you NCD. You will have to provide proof by way of the old certificate.

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Re- the motorbike. I rang up my previous insurance broker (Carole Nash). The score is if I insure another bike within 3 years of the previous policy expiring then Norwich Union will take my 6 years' NCD into account but will still charge £508 for a new Triumph Sprint ST. No other companies will take the NCD into account but the lowest quote is £555. But after a claim-free year with Norwich Union the 7 years' NCD can be transferred to a lower cost insurer and I will get at least 40% off the £555. I will therefore buy a bike of some sort before October to keep the NCD!
Re- the car. Insurers will take into account my daughter's use of a company car from September 2000 for 3 years (until September 2005) as NCD but will penalise her by a £100 rise in premium for a £471 claim from damage by an unknown 3rd party while parked in 2001. Honesty can be expensive but concealing pertinent facts could be more expensive in the long run.

I can understand why JT feels aggrieved. Insurers are supposed to assess the risk of a claim being made. A long history of not costing insurers money is presumably indicative of this continuing into the future.
For instance I did come off a previous motorbike at low speed and paid about £500 for the bike to be repaired rather than make a claim. Over the years my motorbike riding has been pure profit for my insurers. Because I haven't ridden a motorbike for 2 years why am I suddenly a bad risk?

I believe that this is exactly the example that explains NCD and the way it expires. It's not about the risk posed by a driver (if it was that could be used to calculate a premium). It's about the risk posed by a driver's regular and current circumstances. Suppose I park in the station car park every day - my risk of theft is increased (I expect). The risk of getting a car damaged while parked must vary substantially depending on where the vehicle is parked. A change of job could alter the risk wildly.

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Paul Smith
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There is also a systematic reason for this.

Notice of NCD passes forward from previous insurer to new insurer via your renewal notice. Other than this, no information on previous situations passes along the line.

NCD has to expire. If it did not, if I claimed in one year, I could simply pretend to a new insurer that I had had no policy in the year of the claim! Because the information flows forwards once per year when you renew (with no ability to check back), the company could never find out about the missing claim in the missing year.

This system of verification can only work by insisting on a continuity of renewal notices which passes NCD information along the line.

This is not entirely due to money-grubbing.

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Sorry, but that doesn't work either Basingwerk. If the loophole you outlined worked it would work under the current situation, as you can carry your NCD for up to two years without loss.

It doesn't work because you surrender your "proof of no claims" at the point where you take out the next policy, so therefore if you then had a claim you would no longer have the previous "proof" available. Also, you would be making a false statement which would invalidate your new insurance policy which would be little different to - say - lying about your age or driving history. Whether NCD "expires" after one or two years - or never - is pretty much irrelevant in all of this.

Picking up on Paul's post though, the interesting question that arises is "what is the purpose of NCD?"

As I see it, it is not about assessing risk, as this is done in the basic policy via loadings etc. NCD is entirely independent of risk assessment, and I can only conclude that it is basically a (strong) incentive towards not claiming, both in terms of taking extra care, and in terms of making alternative arrangements in the event of a potential claim arising. So both these issues are really measures of "attitude" rather than inherent risk, so how can it possibly "expire"?

I can't come up with any logical definition of NCD that supports the notion of it "elapsing" after a period of time.

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