Does it pay to over-insure, or insure an insurance policy?

[Guest]

I renewed my car insurance last week, and I got a strange telephone call from my insurer, Admiral.

They asked me a question that really got me head scratching as to what it was they were trying to sell.

He wanted me to 'protect my no claims bonus'. I enquired further, why I would want to do that? Their reply was: if I have an accident, it will not affect my no-claims discount.

I replied, all claims are recoded in a database, and I am required to disclose that when I renew the policy, and as such, that would be factored when setting the premium.

I suggested the caller was selling a policy that he knew does not function as described. The caller appeared confused and politely ended the call.

Does anyone else have experience of this?

[P.Pilcher]

Re: Does it pay to over-insure, or insure an insurance policy?

As you know, the rule of insurance companies is always "Heads we win, tails you loose" and I suppose the idea of protected no claims bonuses is the offshoot of this.
You see, insurance companies fix their premiums, particularly in the field of motor insurance on the percieved risk of the driver, so if said driver has made no insurance claims for a number oif years he/she is considered a good risk and the premium charged is reduced appropriately. This reduction is usually called the no claims discount or no claims bonus. It can often be more than 50% of the actual premium. so if the insured makes a claim then the no claims discount is lost and the following year the no claims discount will vanish causing the premium to double of even thrble. This is where the protection bit comes in. If this additional premium is paid, then a single claim will not affect the no claims bonus and this might mean that in the event of a claim you will be able to afford to insure your car in the subsequent year. Not all drivers are offered this, but in these days of so many uninsured (usually young and inexperienced) motorists on the road causing accidents which are no fault of yours whatsoever it is a bit unfair when the following year you find that the insurance claim you were obliged to make to repair your car has caused a very substantial increase in your re-insurance premium.

P.P.