Image via Flickr user Rahul Ramakrishnan

No Claim Discount

No claims discount is basically a discount that you receive on your car insurance premium as a reward for not having made a claim against your policy. If no claim has been made under your policy for a year or more, you are entitled to a No-Claim Discount (NCD). This NCD reduces the premium for the following year and it is your insurer’s way of recognising you for having been a careful driver.

The following table shows how the NCD is set for both private car and commercial vehicle and motorcycle policies:

PRIVATE CAR POLICIES	COMMERCIAL VEHICLE AND MOTORCYCLE POLICIES
PERIOD OF INSURANCE WITH NO CLAIM	DISCOUNT ON RENEWAL	PERIOD OF INSURANCE WITH NO CLAIM	DISCOUNT ON RENEWAL
1 YEAR	10%	1 YEAR	10%
2 YEARS	20%	2 YEARS	15%
3 YEARS	30%	3 YEARS OR LONGER	20%
4 YEARS	40%
5 YEARS OR LONGER	50%

Will I receive NCD if I have been driving as a Named driver on somebody else policy

No. You will not be able to receive NCD if you have been driving as a Named driver on someone else policy.

Will I receive NCD if I am driving a company car

If you have been driving a company car and then buy a personal car afterwards, you may be allowed to transfer the NCD. However, it is provided you can prove it with a letter from the HR department of your employer.

If I make a claim, will I automatically lose my NCD?

Not really. There is a guide called the Barometer of Liability Agreement (BOLA), which all the insurers in Singapore will use to determine how much each party is liable in an accident. It is designed to speed up claims processing. It does not diminish your right to contest liability under the law. Under the BOLA, your NCD will not be affected if your liability is 20% or less in an accident involving an identified vehicle. However, in all other cases, your NCD may be affected.

Will NCD be reduced in the event of an accident? How much will it be?

Yes. When an accident is partly or entirely your fault, a reduction in your No Claim Discount will apply if you have not selected “No Claim Discount Protector” cover.

If there is a claim made under the policy, your NCD will be reduced as follows:

PRIVATE CAR POLICIES	COMMERCIAL VEHICLE AND MOTORCYCLE POLICIES
Current NCD	NCD after 1 claim	Current NCD	NCD after 1 claim
50%	20%	20%	0%
40%	10%	15%	0%
30% and below	0%	10%	0%

Does my NCD apply to me, or to my vehicle?

In principle, your NCD applies to you and not to your vehicle. For example, if you sell your vehicle and buy another one, you will retain your NCD. However, if you own more than one vehicle, you might have a different NCD for each vehicle.

You should check the details with your insurer, but generally:

Your NCD can be transferred to another vehicle owned by you however it cannot be applied to more than one vehicle at any point in time.

For example, if you have accumulated a 30% NCD while using one vehicle, it does not follow that the same NCD applies to any other vehicle that you own or decide to buy. In other words, you will have to earn the NCD for each vehicle separately.

Your NCD CANNOT be transferred to another person, but occasionally, the insurer may allow you to transfer between spouses for once only.

Can I insure against the loss of my NCD?

If you have accumulated a 50% NCD (five years without a claim), some insurers may allow you to buy protection against the loss of the discount. Certain insurer allows NCD protector with 30% NCD.

By paying a small amount of extra premium, you can make one claim during the year, and still have the discount fully protected. Please check with your insurer whether NCD protection cover is available.

The 50% NCD is protected as follows:

CLAIMS DURING THE PERIOD OF INSURANCE	PRIVATE CAR POLICIES
1	50%
2	20%
3 or more	Nil

Will I lose my NCD if there is a break in ownership of my vehicle?

Most insurers in Singapore will allow you to keep your NCD should there be a break in ownership for up to 24 months. Some insurers set the timeframe at 12 months. You will need to contact your insurer for details.

What to consider before making any claims?

Before making any claims, If the total repair costs incurred is likely to be lower than the current discounts/rebates on your premium (also known as No Claim Discount), it is advisable not to claim the repair cost from your insurance. You are better off paying for the repairs yourself in the long run.

If I settle the claim privately, do I have to report the accident to my insurance company?

Under the new Motor Claims Framework effective from 1st June 2008, If you do not report an accident to your insurer within 24 hours or by the next working day and/or do not provide your car for inspection in accordance with the terms, the insurer may reduce your No Claim Discount upon renewal of your policy.

By Ivan Guan

See Full Story at SGMONEYMATTERS