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A No-Claims Discount rewards you if you don't make any claims on your car insurance policy for a year or more. Here's a guide on how NCD can affect your insurance premium.

Category: Car Ownership Advice


With various car insurance terms used, many car owners can easily get confused. There are also factors that can cause expensive insurance premiums, too.

And if you don't compare when shopping for insurance, you can end up paying much more for effectively the same coverage.

There are many ways to save on car running costs when it comes to ownership, and one of the first steps is understanding your insurance policy. With that, lets talk about one particular car insurance term; NCD.

What is NCD for car insurance?

Driving safe and keeping away from accidents has its benefits, for you'll earn NCD once your insurance policy term ends
No-Claims Discount, or NCD, is a discount that you, the policyholder, earns if you do not make a claim during a full policy term. A policy term usually lasts for 12 months, and you'll earn a 10% discount each year.

Hence, if you terminate your car insurance before 12 months, you will not receive any NCD that you were set to earn by the end of the policy term.

Some insurance companies may use different names to describe NCD, such as NCB, or No-Claims Bonus. They're effectively the same thing.

The discount generally maxes out at 50% for private cars. Some insurers offer discounts on top of your NCD. DirectAsia, for example, offers an additional 10% discount if you've held on to your 50% NCD for five consecutive years. With it, you will technically have 60% NCD.

How do I earn NCD on my car insurance?

It's easy. Just have insurance coverage for a full policy term, and you'll earn a discount for the premiums in the following year. Simply put, if you have not made any claims against your own car insurance for a year, you will earn a 10% discount each year. Keep it that way for the next five years, and you'll earn yourself a handsome 50% NCD.

Of course, you'll need to be the owner of insurance policy at hand.

Will I lose my NCD in an accident?

If you are at fault and are making an insurance claim after an accident, you'll lose some, if not all of your NCD
One of the most common myths with car insurance is that if you're caught in an accident that isn't your fault, you'll lose your NCD when you make a claim. This is not true.

Losing your NCD only applies when you make a claim in an accident when you're found to be at fault, according to the Barometer Of Liability Agreement (BOLA). Insurers follow BOLA to determine if you are at fault during an accident with other vehicles. A liability of 20% or less means you can make a claim without affecting your NCD.

But even if you are found to be at fault, it doesn't mean you'll lose all of your NCD at once.

Generally, insurers will take 30% off the NCD that you've earned upon making a claim.

So if you have 50% NCD, you'll be left with 20% NCD once you make a claim. Make a second claim within the same year, and your NCD drops to 0%.

But it doesn't mean all claims against your insurance policy will result in a reset of your NCD. Making a claim on your windshield for example, will generally not affect your NCD.
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Does private settlement after an accident affect my NCD?

If you do not make a claim against your insurance policy, your NCD will not be affected. Hence, many choose to privately settle accident claims out of their own pocket. But you will still have to make an insurance report, despite not making a claim on your policy. Insurance companies may impose a reduction in NCD if you fail to make an accident report within the stipulated 24 hours.

So, don't get confused; you STILL have to make an insurance report even though you're planning to do private settlement to avoid losing your NCD. This is a common car insurance mistake to avoid when doing an accident insurance claim.

I don't want to lose my NCD. Is there any way?

Some insurers such as DirectAsia offer 60% NCD for drivers who have held on to their 50% NCD for five years or more
Thankfully, its not all doom and gloom once you make a claim. Insurance companies offer different plans to prevent losing your NCD completely in an event of a claim.

Called NCD protectors or optional covers, they generally allow the policyholder to make a claim without completely losing your NCD.

For example: you have earned 50% NCD and you have an NCD protector. If you make a single insurance claim after an accident, your 50% NCD will be untouched throughout the policy term.

Depending on the insurance company, some NCD protectors allow for a second claim during the policy term, keeping your NCD intact.

But the caveat is that the NCD protector is only recognised by the insurer that sold it to you. Going to another insurer may mean losing 30%, or all of your NCD.

I'm changing cars. Does NCD apply to my car or me?

NCD only applies to the owner of the car insurance policy at hand, and not the vehicle.

That said, if you've earned yourself at least 10% NCD, you can transfer it to your next car you insure. Upon the termination of your previous policy, whatever NCD you've earned will be valid for the next 12 months, after which, it will drop to 0%.

Transferring your NCD to different insurers during renewal is also possible. Hence, it is always wise to make a comparison and find the best deal on your next renewal. sgCarMart offers an insurance comparison service for you to do just that.

Is my NCD transferrable to other people?

Subject to appeal, you may be able to transfer your NCD to your immediate family members
Generally, it is not possible to transfer your NCD to your friends or family.

But as a way to entice car owners, some insurers may offer you the possibility to transfer your NCD to your spouse or immediate family members.

But in most cases, you'll have to be insured by the same company, and such a transfer is subject to appeal.

Here are some articles related to car insurance that you might be interested in

Are you getting ripped off on your car insurance?

Got into an accident? Here's how to ensure a smooth insurance claim process

What determines motor insurance premium

Five common car insurance claim mistakes to avoid

Renewing your car insurance? With or without NCD, it is always wise to compare. sgCarMart helps you compare with up to 12 insurers, and its hassle free!
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