Every car owner must have seen the term No Claim Discount (NCD) when purchasing car insurance, and NCD is a significant factor affecting premiums. What exactly is NCD? Is it the same as NCB? MoneyHero answers the questions in the following article, and explains how NCD is calculated and how it affects your car insurance premium!
What is NCD?
NCD is a premium discount offered to a policyholder for not claiming for a certain period of time. NCD is the same as No Claim Bonus (NCB); just the wording differs. As NCD is a form of premium reduction, not a monetary reward, NCD is more commonly used to show its discount feature. NCD accumulates over the years; in other words, keeping a good record can significantly lower the premium. Remember to report your NCD truthfully when you are buying car insurance!
How to Calculate NCD?
NCD accumulates over the years and has an upper limit. NCD generally starts from 20%. But Zurich’s car insurance is an exception. It has a unique claim-free discount (CFD) feature, starting from 30%, 35% in the second year and 45% in the third year, and will only revert to the regular insurance discount rate from the fourth year onwards, as shown in the following table:
|
Year
|
General Car Insurance (Commercial Car)
|
General Car Insurance (Private Car)
|
Zurich’s Motorplus Insurance Plan (Private Car)
|
|
Less than 12 months
|
0%
|
0%
|
0%
|
|
1st Year with No Claim
|
10%
|
20%
|
30%
|
|
2nd Year with No Claim
|
20%
|
30%
|
35%
|
|
3rd Year with No Claim
|
30%
|
40%
|
45%
|
|
4th Year with No Claim
|
30%
|
50%
|
50%
|
|
5th Year with No Claim
|
30%
|
60%
|
60%
|
|
6th Year with No Claim
|
30%
|
60%
|
60%
|
NCD Comparison
Although NCDs are more or less the same among insurers’ insurance plans, the details of their coverage vary. To get the most suitable car insurance policy, it is also important to check the NCD protection!
| Insurer | Allianz | Zurich | bolttech | QBE |
|---|---|---|---|---|
|
Product Name |
Private Car Insurance |
Private Electronic Vehicle Motor Car Insurance |
MotorSmart Plus Comprehensive Insurance |
Basic Premium Car Insurance (Comprehensive) |
|
NCD Protection |
Total amount claimed not exceeding HK$100,000 within one year can retain the existing NCD |
Total amount claimed not exceeding HK$50,000 within one year can retain the existing NCD |
Total amount claimed not exceeding HK$60,000 or 15% of the sum insured within one year can retain the existing NCD, whichever is lesser |
Total amount claimed not exceeding HK$60,000 or 15% of the sum insured within one year can retain the existing NCD, whichever is lesser |
|
NCD Rate |
20% after holding the policy for 1 year and no claim being made |
30% after holding the policy for 1 year and no claim being made |
20% after holding the policy for 1 year and no claim being made |
20% after holding the policy for 1 year and no claim being made |
Get Quotes Online, Simple and Secure
When buying a car, many people would appoint a car dealership or agent to handle their car insurance for convenience purposes. However, to clearly understand the protections, it is strongly recommended that car owners/car-owners-to-be compare and select the appropriate car insurance by themselves. MoneyHero offers instant online car insurance quotes. All you need to do is enter your basic information to get instant premium quotes for most car models. It is very simple and convenient!
Is NCD transferable?
In some cases, yes!
- Transferring to another vehicle of the same type under your name: Yes.
- Transferring to another type of vehicle: No, if you transfer from a private car to a motorcycle, the NCD will be reset to zero.
- Transferring from a company’s commercial vehicle to a private car: Yes, provided that the employer agrees.
- Transferring to another insurer: Yes, if you transfer within 12 months of termination or cancellation of the policy and submit the relevant supporting document.
- Transferring from an overseas insurer to a local insurer: Yes, same as above, transfer within 12 months of termination or cancellation of the policy and submit the relevant supporting document.
- Transfer as a named driver: No, as there is no claim record.
- Transferring to a new buyer when selling a car: No, as NCD is associated with a person, not a car.
It is important to note that NCD is time-limited, usually 12 to 24 months. If an owner sells a car without transferring the NCD to a new car in time, the NCD will be withdrawn as it expires.
Should I Claim When an Accident Happens?
When an accident happens, car owners should report it to their insurers within 24 hours. However, whether to make a claim is entirely up to the owner. Most insurers offer a “step back system” that would not void (reset to zero) the car owner’s NCD even if the car owner makes a claim.
Assuming a car owner is in his fourth year of no claim (with a 50% discount), under normal circumstances, even if he claims due to an accident, he will still be entitled to a 20% discount (i.e. stepping back to the NCD of 20% for making no claim in the first year) upon renewal of the policy, as shown in the following table below:
|
Year
|
General Car Insurance (Private Car)
|
Zurich’s Motorplus Insurance Plan (Private Car)
|
|
Less than 12 Months
|
0% → 0%
|
0% → 0%
|
|
1st Year with No Claim
|
20% → 0%
|
30% → 0%
|
|
2nd Year with No Claim
|
30% → 0%
|
35% → 0%
|
|
3rd Year with No Claim
|
40% → 0%
|
45% → 0%
|
|
4th Year with No Claim
|
50% → 20%
|
50% → 30%
|
|
5th Year with No Claim
|
60% → 30%
|
60% → 35%
|
However, please note that this system is only applicable to private car drivers. If a claim is made by a policyholder of another type of car, the NCD will be reset to zero. Therefore, you should weigh “losing NCD” against “settling the repair cost/compensation in private” and choose the less costly option. If a car owner has accumulated a high level of NCD, settling in private is a better option for minor accidents. But be aware that if a third party is involved, there is a risk of the third party demanding exorbitant compensation.
NCD is undoubtedly an excellent way for car owners to reduce the burden of car insurance premiums. Still, making a claim or not depends on the size of the accident and the NCD accumulated; car owners should make the right choices to get the best protection for themselves and their cars.
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