When to claim on insurance and when not to?
Discussion
For purposes of telling this story, lets say a friend of mine has caused approx. £3k of cosmetic damage to their pristine BMW. Value of car is approx. 17/18k.
Is it worth claiming on insurance to get it fixed - or will the premiums go up by so much that it's cheaper to just pay?
Excess is £650, fully comp with protected no claims. One total non fault claim on their history.
I know it's what we pay insurance for but I also know the system is s
te and we get screwed over for these types of things.
Is it worth claiming on insurance to get it fixed - or will the premiums go up by so much that it's cheaper to just pay?
Excess is £650, fully comp with protected no claims. One total non fault claim on their history.
I know it's what we pay insurance for but I also know the system is s
te and we get screwed over for these types of things. The premium will go up based on two bits - increased number of claims (or amount of claim payout) and reduced no claims bonus.
NCB usually drops 2 years' worth per claim (I'm ignoring NCB protection at the moment). It depends on what that scale represents - if the insurer counts up to, say, 7 years, NCB will drop to 5 years; if their maximum is 4, it will drop to two years. If the four year scale represents 15%, 30%, 45%, 60% reductions, you go from 60% discount to 30% discount (e.g. if premium is £400 with 4 years, premium will be £700 with two years (£1000 with zero NCB)).
So year one, you'll pay £300 extra, year two you'll pay £150 extra and in year 3 you'll be back at normal premium level. (That's the "royal" you, I'm referring to your friend).
On top of those amounts, you'll have the claims loading and it depends on the percentage your insurer applies. If it's another 10%, you'll pay £370 and £205 extra in the two years examples above (10% on the increases, and 10% on the £400 'base' premium), plus maybe the same on year 3 (an extra £40).
Obviously, this is guessing at the insurer's rating and discount structures and doesn't take into account any rate fluctuations over the next few years. For a difference of £2350, I reckon your friend should still be quids in claiming.
ETA: as the previous claim was non-fault, this claim shouldn't affect the protected no claims. It should definitely work out in your favour.
NCB usually drops 2 years' worth per claim (I'm ignoring NCB protection at the moment). It depends on what that scale represents - if the insurer counts up to, say, 7 years, NCB will drop to 5 years; if their maximum is 4, it will drop to two years. If the four year scale represents 15%, 30%, 45%, 60% reductions, you go from 60% discount to 30% discount (e.g. if premium is £400 with 4 years, premium will be £700 with two years (£1000 with zero NCB)).
So year one, you'll pay £300 extra, year two you'll pay £150 extra and in year 3 you'll be back at normal premium level. (That's the "royal" you, I'm referring to your friend).
On top of those amounts, you'll have the claims loading and it depends on the percentage your insurer applies. If it's another 10%, you'll pay £370 and £205 extra in the two years examples above (10% on the increases, and 10% on the £400 'base' premium), plus maybe the same on year 3 (an extra £40).
Obviously, this is guessing at the insurer's rating and discount structures and doesn't take into account any rate fluctuations over the next few years. For a difference of £2350, I reckon your friend should still be quids in claiming.
ETA: as the previous claim was non-fault, this claim shouldn't affect the protected no claims. It should definitely work out in your favour.
Edited by xRIEx on Tuesday 17th February 14:32
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