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Everything You Need to Know About No-Claims Discount (NCD)

Ferlin Mok

Ferlin Mok

Last updated 28 December, 2023

No-Claims Discount, or NCD, can save you big on car insurance. Whether you are a new driver or a seasoned one, it's beneficial to understand how this discount works.

This post covers everything about NCD – from what it means to how it is awarded, reduced, and even transferred. Drivers are often confused about what happens to their NCD when they change cars, own multiple cars, or switch between vehicle types. We answer the questions you have about these situations. Knowing how your NCD works can help you save money on your car insurance for many years.

See also: True Cost to Maintain a Car in Singapore (2023)

Table of contents


What Is No-Claims Discount (NCD) for Car Insurance

NCD is a form of reward given to drivers for staying accident-free (i.e., claim-free). It gives you a percentage discount on your car insurance premium based on your NCD level.   

When you first get car insurance, your NCD starts at 0%. That means you don't get any discount. It goes up by 10% each time you renew your policy if you didn't make any claims that year. The highest NCD you can get is 50%. With a 50% NCD, you only pay half the standard premium. That's a big savings! 

For example, if the standard premium is S$1,500, with 50% NCD, you would pay only S$750.

While NCD increases when you don't make claims, it also decreases if you make a claim. 

NCD applies to private cars, commercial vehicles, and motorcycles, but we'll focus on private cars in this post.


How No-Claims Discount (NCD) Is Calculated / Awarded

In Singapore, all insurance companies follow a similar rule when awarding NCD to drivers. 

NCD is automatically awarded. Your NCD will increase on renewal if you did not claim in that current policy year. Even if you make a claim, if it is proven that you are totally not at fault, your NCD will not be reduced. 

The table below shows how all insurers determine NCD.

NCD for Private Car Insurance
Period of Insurance With No Claim
NCD (i.e., Premium Discount on Renewal)
1 year
10%
2 years
20%
3 years
30%
4 years
40%
5 years or longer
50%

How Claims Affect Your NCD 

Your NCD goes down if you claim for an accident that was partially / entirely your fault. 

Some examples of accidents that would reduce your NCD are:

  • A traffic accident involving another vehicle, and you are at fault for it. 
  • Reversing and hitting a wall, damaging your car.

It's much easier to lose your NCD than to earn it - While it takes five years in a row without any claims to build up a 50% NCD, it only takes two claims in one year to reduce it to 0%. That’s why having an NCD Protector is vital to safeguard your NCD. 

NCD for Private Car Insurance
Current NCD
NCD After One Claim
50%
20%
40%
10%
30% and below 
0%

Transfer of NCD 

NCD transfer can be confusing, even for experienced drivers. Let's break down when you can transfer your NCD to someone else or another vehicle and when you can't.


When You Change Your Car

NCD applies to you, not your car. If you sell your car and get a new one, the new car still gets the same NCD benefit as your previous car.


When You Own a 2nd Car or More

Although NCD applies to you, it does not apply universally to all your cars. In other words, you can’t use one NCD on two cars at once. For each vehicle you own, you need to build up NCD separately. 

For example, your first car has 50% NCD. When you buy a second car (and still own the first car), the second car's NCD will start at 0%. The second car does not enjoy 50% NCD immediately. 


When You Switch Vehicle Types (Like From a Motorcycle to a Car)

You cannot transfer NCD from one type of vehicle to another. 

For example, if you sell your car with 30% NCD and buy a motorcycle / van, your NCD on the motorcycle / van will start at 0%.


When Transferring to Another Person

You typically cannot transfer your NCD to another person, even your children. However, most insurers allow you to transfer the NCD to your spouse if you renew the car insurance with the current insurer. 


When Switching From Company Car to Personal Car

You can transfer NCD from a company car to a personal car if you fulfill these conditions: 

  • You were the policyholder or named driver of the car insurance for the corporate car, and
  • Your company confirmed in writing the number of years you were ‘claim-free’ and
  • Your company authorised you to take over the NCD in writing. 

Requirements vary by insurer, so be sure to check with the insurance company. 


When You Sell Your Car and Buy Another Car More Than 2 Years Later

Most insurers let you keep your NCD for up to 2 years (sometimes 1 year) after selling your old car before it resets to 0%.

So, if you had 50% NCD when you sold your car and bought a new one within 2 years, you retained the 50% NCD entitlement. But if you wait more than 2 years, your NCD starts at 0% again.

In summary, 

You Can Transfer Your NCD
You Cannot Transfer Your NCD
  • When you switch insurers during your car insurance renewal, provided that you are still the policy owner.
  • When you sell your old car and buy a new one within 12 to 24 months.  
  • To your spouse, provided that you renew the car insurance with the current insurer. 
  • From your company car to your personal car, provided that you fulfill certain conditions.
  • When you sell your old car and buy a new one after 24 months. 
  • When you buy a second car and still own the first car.
  • If the person is not your spouse.   
  • Across different vehicle types (e.g., from motorcycle to car). 

NCD Protector

NCD Protector is an optional add-on that you can include in your car insurance. The purpose of it is to prevent your NCD from getting reduced even if you make a claim. By safeguarding your NCD, you will enjoy the same percentage discount on your car insurance the next year. 

For example, you currently have a 40% NCD. You make a claim that proves to be your fault. Without NCD Protector, your NCD would decrease to 10% when you renew your insurance next year. But with NCD Protector, your 40% NCD stays the same when you renew with the same insurer

NCD Protector does not automatically come with car insurance. You must ask your insurance company to include it when you buy your policy.   


How Much Does NCD Protector Cost

NCD Protector costs extra money on top of your normal premium. There is no fixed price for it. Each insurance company charges for it differently. However, it usually costs about 10% of the car insurance premium before NCD is applied.

Even though getting NCD Protector increases your overall premium, it can be worth it because it allows you to retain your NCD entitlement when you make a claim. So, you save money in the long run by not losing your high NCD discount. The extra 10% you pay for the protector is small compared to saving 20%, 30%, or more thanks to preserving your NCD. Paying extra for an NCD Protector is a good investment for many drivers.


NCD Protector Is Not Transferable Across Insurers

Drivers need to know that the NCD maintained by an NCD Protector with their current insurer does not transfer to another insurance company. In other words, you cannot transfer the effect of NCD Protector across insurers.  

For example, your NCD is 50% with Insurer A, and you make a claim. Without an NCD Protector, your NCD would drop to 20% due to the claim. But with the NCD Protector, your NCD remains at 50% with your current insurer. 

If you decide to switch to Insurer B during renewal, the correct NCD entitlement you must declare is 20% and not 50%. This is because the NCD Protector doesn't transfer between insurers.

If you provide the wrong NCD declaration to the new insurer, they will lower your NCD accordingly and charge you for the additional premiums when they find out later. 


Conclusion 

NCD is an excellent reward for safe driving. It's the best discount to lower the ongoing cost of owning a car in Singapore. You can further maximise your savings by shopping for the best car insurance rates. Rather than automatically renewing with your current insurer, get at least 3 quotes. Compare the rates and coverage. And make sure to add NCD Protector to keep your hard-earned NCD safe if you do have a claim. Compare car insurance effortlessly with SingSaver and get the best deal on car insurance to maximise your savings!

If you found this post helpful, share it to help others.


FAQs

How Do I Check My No-Claims Discount (NCD) in Singapore?

There are two simple ways to find out your existing NCD. 

  • The first is to look at your current car insurance policy schedule - It shows your current NCD entitlement. 
  • The second is to ask your current car insurance company directly.  

Is NCD on Car or Person? / Can NCD Be Used on Two Cars?

NCD applies to you as a driver, not your specific car. So, if you sell your old car and get a new one, your NCD level moves to the new car.

However, your NCD doesn't apply to all cars you own at the same time. You can only use one NCD on one car at a time. It means for the second car in your ownership, its NCD will start from 0% regardless of how much NCD you have on the first car. 


What Happens to My NCD After I Sell My Car? / Does NCD Expire? 

After you sell your car, the existing NCD entitlement you’ve earned is valid for 12 to 24 months. If you buy a new car within that timeframe, you can keep the same NCD level on the new car. This period of validity differs among insurers. You must check with the respective insurer when you purchase a new car insurance. 

After 24 months, your NCD expires and resets to 0%.

A financial adviser by day and wordsmith by night. She advocates building wealth on a sturdy insurance foundation. Simplifying personal finance is her expertise. When she's not buried in numbers and policy contracts, catch her immersed in a good book, mastering languages, or cheering on her beloved LoL team.

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