Everything You Need to Know About No Claim Discount (NCD) in Singapore

motorist-no-claim-discount-cover

If you own a vehicle in Singapore, you’ll definitely have motor insurance coverage, and you’ve probably heard of the No Claim Discount (NCD). In this article, we’ll answer your burning questions about NCD.

It’s mandatory for all drivers in Singapore, no matter what vehicle you drive, to get motor insurance. Driving on the roads without insurance is actually considered illegal in Singapore.

And of course, if you have insurance, you’ll most likely be entitled to NCD.

So, what is a No Claim Discount?

If you’ve read our other articles about car insurance coverage and how to save money on premiums, you probably would have come across an explanation of NCD.

But since this is an NCD-focused article, let’s recall what it is.

A No Claim Discount, sometimes referred to as the No Claim Bonus (NCB) in other countries, is a discount given by insurers when their policyholders do not make any claims. Hence the name – “No Claim” Discount.

It’s basically a reward from your insurer to you for good driving.

You get an increase in your NCD for every year that you don’t make a claim, which then results in a discount in your premium.

NCD for Private Cars

motorist-no-claim-discount-ncd-for-private-cars(Photo Credit: Pexels)

If you drive a car, this section is for you!

Keep in mind that this refers to private cars, which are cars that are used for personal and non-profit reasons.

In a nutshell, the NCD for private cars is more flexible as you can grow it until it caps at 50%. There are also special NCD deals for car insurance policyholders, but we’ll get into that later.

For now, let’s see how we can earn NCD.

Insurance Period Without Any Claims

NCD Discount at Renewal

1 year

10%

2 years

20%

3 years

30%

4 years

40%

5 years or longer

50%

According to the table above, the NCD for your private car grows 10% for each year that you don’t make a claim. Once your NCD hits 50%, it retains that value until you make a claim.

50% NCD also means a 50% discount on your premium.

So, if your premium is S$1000 a year, after the 50% NCD has been deducted, you’ll only have to pay S$500 for your premium!

NCD for Motorcycles and Commercial Cars

motorist-no-claim-discount-ncd-for-motorcycles-commercial-cars(Photo Credit: Unsplash)

What’s the difference between a private and commercial car? A commercial car is one used for profit. Such examples are taxis and private hire vehicles, such as Grab cars.

NCD for these cars and motorcycles are slightly different from private cars. One of the biggest differences is that NCD caps at 20% instead of 50%, which is the maximum for private cars.

Insurance Period Without Any Claims

NCD Discount at Renewal

1 year

10%

2 years

15%

3 years

20%

The table above shows how NCD increases with each year that you don’t make a claim. It increases by 5% each year and maxes out at 20%.

This means you’ll get 20% off your premium for motorcycle and commercial car policyholders.

What Affects the Drop in NCD?

Making a Claim

The most common cause is making a claim when you get into an accident. But it’s actually a lot more complicated than that. To make this easy, we’ll give you a scenario.

You’re a private car driver who got into an accident with a third party. Firstly, you’ll have to take into consideration who really was at fault for the accident. Was it you, a third party or both?

If it was you, or both parties, and you make an insurance claim, your NCD will drop by 30%. But what if you swear that you’re not the one at fault?

Motor insurance companies use this system titled the Barometer of Liability Agreement (BOLA) to determine which driver was at fault. Refer to this chart to see how the BOLA is calculated.

If your liability is less than 20%, that’s great news! Your NCD will not be reduced at all.

Not Reporting an Accident

Another scenario is if you get into an accident and fail to report it within 24 hours.

Following the Motor Claims Framework (MCF), some insurers may penalise your NCD by about 10% for private cars, and 5% for commercial cars and motorcycles, if you fail to file an accident report within the stipulated 24-hour timeframe.

The MCF has been in effect since 1st June 2008.

To be safe, you should report the accident ASAP – you wouldn’t want to see a drop in your NCD even if you’re not at fault!

Break in Car Ownership

Normally, you’d be able to keep your NCD for about 12 to 24 months, depending on your insurer. Be sure to double-check with them for confirmation.

Is NCD Transferrable?

motorist-no-claim-discount-is-ncd-transferrable(Photo Credit: Pexels)

One of the most frequently asked questions by policyholders, and the answer is always the same – “NCD applies to the owner and not to the vehicle”.

While this is true, many drivers still have questions about it.

NCD is a discount given when the driver doesn’t make any claims, so of course it would apply to you and not the vehicle. After all, your vehicle can’t be responsible for an accident.

NCD is transferrable between:

  • One vehicle to another, but they have to be under the same owner.
  • Spouses, but only once and only if you renew with the current insurer
  • Insurers, but only for the same vehicle type

NCD is not transferrable between:

  • Different persons, meaning you can’t transfer from one person to another
  • Multiple vehicles, as NCD can only apply to one vehicle at a time
  • Vehicle types, so (e.g.) you can’t transfer your car’s NCD to your motorcycle

Your NCD could also be transferrable from a company car to your personal car. Be sure to confirm with your insurer.

NCD Protector

motorist-no-claim-discount-ncd-protector(Photo Credit: DirectAsia)

When you purchase a new motor insurance policy, you will probably have to think hard about which add-ons you would like to stack on top of your policy. One of these options is the NCD Protector, which protects your NCD for one claim.

The NCD Protector is a way to keep your NCD at the same level even when you make a claim. It is usually only allowed for NCD levels 30% and above, and is for one-time use.

Without the NCD Protector, this is how your NCD gets reduced:

Amount of NCD Accumulated (for Private Vehicles)

NCD After 1st Claim

NCD After Subsequent Claim

50%

20%

0%

40%

10%

0%

30%

0%

0%

20%

0%

0%

10%

0%

0%

Amount of NCD Accumulated (for Commercial Vehicles

& Motorcycles)

NCD After 1st Claim

NCD After Subsequent Claim

20%

0%

0%

15%

0%

0%

10%

0%

0%

Some insurers, such as Sompo, provide free NCD Protection.

Here’s how your NCD gets reduced with the NCD Protector:

Amount of NCD Accumulated (for Private Vehicles)

NCD After 1st Claim

NCD After Subsequent Claim

50%

50%

20%

40%

40%

10%

30%

30%

0%

20%

0%

0%

10%

0%

0%

NCD Protector for motorcycles and commercial vehicles is a lot more complicated as not all insurers provide NCD protection for these policyholders.

Some insurers, like Budget Direct and DirectAsia, provide it though.

Special NCD Deals

motorist-no-claim-discount-special-ncd-deals(Photo Credit: DirectAsia)

With every insurer providing NCD, some need to stand out from the crowd. Today we’ll be talking about three different NCD deals.

FWD's Lifetime NCD Guarantee

According to the press release on the same topic, it was stated that “93% of drivers … thought it was unfair to lose an NCD after an accident.”

This sparked some brainstorming in FWD, and they came up with Lifetime NCD. Let’s break down what it is.

Once your NCD hits 50%, meaning you have not made any claims for five years, you’re automatically eligible for Lifetime NCD – as long as you’re insured with FWD.

It applies to only one private car at a time, and is non-transferrable between insurers.

This guarantee provides you with 50% NCD forever, no matter how many “at fault” claims you make, provided you continue renewing your policy with FWD.

Although, this doesn’t mean that you can drive recklessly once you get this privilege. Please be safe on the roads wherever you go.

DirectAsia's NCD60 and NCD30

DirectAsia is ahead of the game in the sense that they provide greater discounts for NCD, for both private cars and motorcycles.

Let’s start with the private car scheme – NCD60.

For DirectAsia policyholders, you’re entitled for NCD60 when you reach 50% NCD. But there’s a catch! You have to retain your NCD at 50% for five consecutive years.

In total, this means you’re only eligible for NCD60 if you don’t make any claims for 10 whole years! Going that long without getting into an accident is really something to be rewarded. That is where NCD60 comes in!

NCD60 is basically just a shorter term for your NCD reaching 60%, which is 10% more than the industry maximum amount. This means you’ll automatically get a 60% discount on your car insurance premium when you renew it.

Now, let’s move on to the motorcycle scheme – NCD30.

Since the max NCD for motorcycles is 20%, DirectAsia has taken the liberty of giving these cyclists an extra 10% off their premium. Riders are entitled to an increase in NCD provided that they have reached 20% NCD, or NCD20.

If you retain NCD20 for one year, your NCD rises to 25%. If you retain it for two years or longer, it reaches 30% and maxes out there.

And good news, both NCD60 and NCD30 can be protected with an NCD Protector!

Aviva's 10% NCD Penalty

When you make an “at-fault” claim, your NCD drops by 30%, as per industry standard.

Aviva has taken it upon themselves to offer the lowest NCD penalty throughout the country, deducting 10% only instead of the usual 30%.

Let’s see how this works:

Amount of NCD Accumulated (for Private Cars)

NCD After 1st Claim

NCD After Subsequent Claim

50%

40%

30%

40%

30%

20%

30%

20%

10%

Assuming you have purchased the Motor Standard or Motor Prestige plan with Aviva, you are entitled to this low NCD penalty. Unfortunately, those under the Motor Lite plan will have the industry standard NCD deduction of 30%.

We hope that this article has helped you understand more about the No Claim Discount in Singapore. Do you have any questions that haven’t been answered? Leave them in the comments below!

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