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No Claims Discount (NCD) protection in Singapore

We all know that it is expensive to own a car in the Lion City, as there is a wide range of expenses to pay; from a Certificate of Entitlement (COE), car loan interest, petrol, and parking fees to road tax and insurance premiums. This is probably why drivers in Singapore care so much about their no claims discount (NCD), as it can give them up to 50% off of their premiums if they meet certain requirements. This is by no means a small number, especially if you are driving a luxury sports car or other vehicle that demands higher premiums.

As the insurance industry evolves with time, there is now another insurance product for the NCD itself, which is NCD protection. In this feature, Kwiksure Singapore will give you a brief overview of NCD protection, how it works, and why it’s worthwhile.

What’s a No Claims Discount (NCD)?

NCDs, aka No Claims Discounts, is a premium discount offered to policyholders for every year of driving claims-free. The NCD usually builds over time, which means that the longer you stay claims-free, the greater the premium discount you can accumulate. There is a standard followed by all insurers in setting the NCD, depending on your type of vehicle (private or commercial and motorcycle) and the period of being insured without a claim.

Below is an example of how NCDs are applied to private car insurance premiums:

1 year of claims-free driving: 10% NCD

2 years of claims-free driving: 20% NCD

3 years of claims-free driving: 30% NCD

4 years of claims-free driving: 40% NCD

5 years of claims-free driving or longer: 50% NCD


On the other hand, here’s an example of how NCDs are applied to commercial vehicle and motorcycle insurance premiums:

1 year of claims-free driving: 10% NCD

2 years of claims-free driving: 15% NCD

3 years of claims-free driving or longer: 20% NCD

In the event of an accident, if you are found totally not at fault, then your NCD might not be affected, otherwise it will be reduced. Luckily, NCDs work on a ‘step back’ system for private vehicles. This means that a single serious accident should not eliminate all the entitlement that you have towards NCD during the next policy year, but instead impose only a 30% reduction on your NCD.

For example, a 50% NCD will become 20% when the policy renews if an accident has occurred in the past policy term. However, this ‘step back’ system only applies to private vehicles, and all other types of vehicles will lose their NCD entirely at renewal upon a single claim.

Furthermore, some insurers may penalize the policyholders’ NCD if they fail to report an accident within 24 hours of the occurrence, or by the next working day. In such cases, for every non-reporting, the NCD of private car owners will be reduced by 10% at renewal while the NCD of commercial vehicle and motorcycle owners will be cut by 5% at renewal.

What is NCD protection?

NCD protection is an extension of your motor car insurance policy that lets you insure against your NCD. By paying a slightly higher premium, drivers can make one claim under their policy and still have their NCD unscathed. This rider is only available if your NCD is 50%. However, some insurers may also allow their clients to add this benefit if their NCD is 40% or above.

How does NCD protection work in Singapore?

The table below shows the NCD change of a driver with a 50% NCD (five years without an accident).

Number of claims made Protected NCD Unprotected NCD
One 50% 20%
Two 20% 0%
Three or more 0% 0%

As seen above, if you have an NCD of 50% and have made one claim, normally your NCD should drop to 20%. However, if you have secured an NCD protection, your NCD will remain at 50% upon your next motor insurance renewal.

So should I consider NCD protection?

The remaining question is whether NCD protection is worth it. Here we will try to put in some figures for illustrative purposes. Let’s say your base premium is $2,000 per year, but since you did not submit any claims in the past five years, you are enjoying a 50% NCD, making your premium $1,000 per year.

The cost of NCD protection is typically 10% of the current premium, which will be $200.

Without NCD protection

If you don’t have any NCD protection and run into an accident, your No Claims Discount will be lowered from 50% to 20% and your premium will become $1,600 during the next policy term. Hence, even when you consider the $200 you have saved by not purchasing the NCD protection, you are still losing $400 altogether.

With NCD protection

If you do have NCD protection and run into an accident, your No Claims Discount will remain intact at 50%. In the following year, you can still enjoy the 50% NCD and your premium will remain to be $1,000.

That said, NCD protection policies come with their own terms and conditions, and the exact details may vary between different policies. For example, most motor insurers would not allow policyholders to transfer their NCD protection to another insurer. Thus, it is crucial that you check carefully with insurers beforehand to avoid any unpleasant surprise when you lodge claims.

Compare motor insurance plans and prices with ease

Above is just a rundown on how NCD works theoretically. However, there is not much you can do if the insurer decides to impose a drastic premium increase to offset any large claims that you have submitted during the previous policy term. Luckily enough, though, more established, sizeable insurers tend to have more stable premium patterns.

With over 18 years of experience and nine offices across the globe, Kwiksure Singapore is well-versed in matching clients with plans that best meet their needs. Not only do we specialize in motor insurance, but we also offer a vast array of insurance solutions, including home and travel insurance. As an established insurance brokerage, Kwiksure Singapore knows the ins and outs of different insurance products and insurers. Contact us today for unbiased insurance advice, and an obligation-free quote and plan comparison!