No Claims Discount (NCD) Protector: Should you buy yourself this car insurance rider?

A No Claims Discount Protector can help you preserve years of careful driving, allowing you to continue saving up to several hundred dollars a year. 

Auto insurance is mandatory, and it can be pretty expensive too. No Claims Discounts are therefore a godsend, helping responsible, accident-free drivers save a chunk on their car insurance premiums. 

But even the most careful and conscientious driver is human, and therefore prone to slip ups. An accident can reduce your No Claims Discount to zero, undoing all your years of careful driving in an instant. 

Well, you can prevent this to a degree, if you have an NCD Protector.

What is a No Claims Discount Protector?

As its name suggests, a No Claims Discount Protector, uh, protects your No Claims Discount.

But, what is a No Claims Discount? 

No Claims Discounts, explained

A No Claims Discount (NCD, sometimes also known as a No Claims Bonus) is a type of reward scheme that encourages safe driving using economic incentives. 

Drivers are eligible for a discount off their auto insurance premiums for every year of accident-free driving. Each year on the road without incident earns you an increasing discount, which varies for private cars, corporate vehicles and motorcycles. 

This discount is applied when you renew your car insurance for the next policy year.

See the following table for an illustration:

Drivers of private cars can accumulate up to 50 per cent NCD over five years. Meanwhile, motorcycle riders and corporate vehicles can only stack up to 20 per cent NCD over three years. 

In any case, maxing out your NCD is a good idea, as it helps you save money on your auto insurance – as much as several hundred dollars a year for private car drivers!

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Ok, so what happens if I do get into an accident? 

If you get into a road accident in which you are deemed ‘at fault’, your NCD entitlement will be reduced, as follows:

Current NCD	1 “at-fault” claim	2 or more “at-fault” claims
50 per cent	20 per cent	0 per cent
40 per cent	10 per cent	0 per cent
30 per cent or below	0 per cent	0 per cent

So for example, Ricky, rushing home after a night out, exceeds the speed limit and rear-ends the car in front of him.

His current NCD is 50 per cent. Since this is his first ‘at-fault’ accident of the year, his NCD drops to 20per cent.

If he makes another ‘at-fault’ claim within the same year, his NCD will drop to 0 per cent. 

As your current NCD is applied on the next renewal, Ricky has to pay full price when he renews his auto insurance next year. 

If Ricky only had one accident instead of two, he would have managed to get a 20 per cent discount on next year’s premium. 

ALSO READ: So, you've gotten into a car accident. Here's how it will affect your insurance policy

Can I prevent the loss of my NCD?

The answer is yes. 

You can do so by purchasing a – you guessed it – NCD Protector. Let’s take a look at how this rider works in the next section. 

How does a No Claims Discount Protector work?

An NCD Protector works by preventing you from losing the NCD you have built up, for the first ‘at-fault’ accident of your policy year.

Think of it as a ‘one-hit’ shield that is good only for that policy year. You cannot accumulate NCD Protectors from previous years. 

This means that if you get into two or more ‘at-fault’ accidents within the policy year, the usual penalties will apply. 

Here’s an illustration:

Current NCD	1 ‘at-fault’ claim (w/ NCD Protector)	2 ‘at-fault’ claims(w/ NCD Protector)	3 or more ‘at-fault’ claims(w/ NCD Protector)
50per cent	50 per cent	20 per cent	0 per cent
40per cent	40 per cent	10 per cent	0 per cent
30per cent or below	30 per cent	0 per cent	0 per cent

In this way, an NCD Protector may be considered insurance for your car insurance.

How do I purchase a No Claims Discount Protector, and how much does it cost?

You may purchase an NCD Protector from your auto insurance vendor, as a rider attached to your main auto insurance policy. 

In most cases, an NCD Protector is automatically included when you switch to another auto insurer while carrying an existing NCD. 

As for how much it costs, well, the online quotes we generated while researching this article didn’t list an item breakdown, so we can’t tell you for sure. 

However, online sources indicate that NCD Protectors are usually in the neighbourhood of 10 per cent of your policy premium. 

Do enquire at your preferred insurer to get an exact figure. 

ALSO READ: Car insurance no-claim discount protector: Is it worth the money?

What else do I need to know about my NCD Protector?

Some vendors require a certain amount of NCD 

Say you have been driving for a year with no accidents, and thus earned an NCD of 10 per cent. You may want to lock in this protection with an NCD Protector. 

However, some insurers only offer NCD Protector to drivers with a certain level of NCD, say 30 per cent or more. Hence, you may not be able to get an NCD Protector right from the get go.

Not all claims will affect your NCD and NCD Protector

If you need to get your windscreen or windows repaired or replaced, don’t worry about your NCD or NCD Protector taking a hit. Such repairs are usually not counted, and should not affect your current NCD. 

The same applies if you are found wholly to be not at fault in the accident you’re claiming for. In this case, your NCD is preserved, and your NCD Protector won’t be activated. 

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NCD entitlement is non-transferable between drivers

You cannot transfer your NCD entitlement to another driver. 

However, you will usually be allowed to transfer your NCD when changing cars.

If you purchase a second car, your insurer may allow you to choose which of the two cars will continue to benefit from the NCD you have accumulated. 

This means you’ll need to build up your NCD entitlement for the other car over time.  

Who should get a No Claims Discount Protector rider?

Basically, everyone who drives.

Think about it, nobody wants to get into an accident, so every driver or rider out there is already invested in driving as safely as they can.

Hence, why not be rewarded for something you are already doing? Besides, driving in Singapore is already costly enough, so there’s no sense in passing up the opportunity to save a couple of hundred dollars.