Unlock the Secrets of No-Claims Discount (NCD) for Car Insurance

Driving in Singapore can be an expensive affair, especially when it comes to car insurance.

One of the best ways to save on your insurance premium is to understand and make the most out of the No-Claims Discount (NCD).

Let's dive into everything you need to know about NCD, and how it can significantly lower your car insurance costs.

What is NCD for Car Insurance?

The No-Claims Discount (NCD) is a reward system for safe drivers.

If you go a full year without making any claims on your car insurance, you earn a discount on your premium for the next year.

It’s a simple yet effective way to encourage careful driving.

NCD, also known as No-Claims Bonus (NCB) by some insurers, starts at 10% for one claim-free year and can increase by 10% each year up to a maximum of 50%.

For example, if you maintain a clean record for five years, you could be looking at a hefty 50% discount on your premium.

Some insurers even offer additional bonuses.

DirectAsia, for instance, provides an extra 10% discount if you hold a 50% NCD for five consecutive years, bumping your total discount to 60%.

How to Earn NCD on Your Car Insurance

Earning NCD is straightforward.

All you need to do is maintain your car insurance without making any claims for a full policy term, typically 12 months.

Every year without a claim adds another 10% to your NCD.

Here’s a quick breakdown:

• 1 year claim-free = 10% NCD
• 2 years claim-free = 20% NCD
• 3 years claim-free = 30% NCD
• 4 years claim-free = 40% NCD
• 5 years claim-free = 50% NCD

Once you hit the 50% mark, keeping a clean record for another five years with some insurers can get you an additional 10%, making it a total of 60%.

Impact of Accidents on Your NCD

One of the biggest concerns for drivers is whether an accident will wipe out their hard-earned NCD.

The good news is, if the accident wasn’t your fault, your NCD remains unaffected.

Insurers use the Barometer of Liability Agreement (BOLA) to determine fault in accidents.

If your liability is 20% or less, your NCD is safe.

However, if you’re found at fault, you will lose a portion of your NCD.

Typically, insurers will deduct 30% off your NCD for each claim.

So, if you have a 50% NCD and make a claim, it will drop to 20%.

A second claim in the same year could reduce your NCD to zero.

Claims for specific incidents like windshield damage generally don’t affect your NCD, but it's always good to check with your insurer.

Private Settlements and NCD

Many drivers opt for private settlements after minor accidents to avoid losing their NCD.

While this can be a smart move, it’s crucial to still report the accident to your insurer.

Failing to make a report within 24 hours can result in a reduction of your NCD.

So, even if you’re paying out of pocket, make sure your insurer is in the loop.

Protecting Your NCD

Worried about losing your NCD?

Some insurers offer NCD protectors, which allow you to make a claim without losing your discount.

For example, if you have a 50% NCD and purchase an NCD protector, your discount stays intact even after making a claim.

Keep in mind that NCD protectors are typically only valid with the insurer who sold it to you.

Switching insurers might result in losing part or all of your protected NCD.

Transferring Your NCD

Switching cars?

Your NCD is linked to you, not your vehicle.

This means you can transfer your NCD to your new car when you change vehicles.

Additionally, you can carry your NCD over to a new insurer during policy renewal.

This allows you to shop around for the best deals without losing your discount.

However, transferring your NCD to another person is generally not allowed.

Some insurers may make exceptions for immediate family members, subject to appeal and specific conditions.

Always check with your insurer for their policies on NCD transfers.

Conclusion

Understanding and maximizing your No-Claims Discount can lead to significant savings on your car insurance premiums.

By driving safely and maintaining a clean record, you can earn up to a 50% discount, or even 60% with certain insurers.

Keep these tips in mind, protect your NCD, and make informed decisions to keep your car insurance costs down.

Writer's note: Images are purely fictional; for illustration only.