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Is an NCD protector worth the money?

We all like to think of ourselves as safe drivers, but roads can be unpredictable in places where accidents happen all the time.

Should you be unfortunate enough to get into an accident where you’re the driver at-fault, you run the risk of losing your No Claims Discount (NCD). Many drivers worry about completely losing a discount which they may have spent years accumulating through safe driving. However, you can avoid losing your NCD is if you purchase an NCD protector through your car insurance policy.

But is the NCD protector really worth it? Before you can figure that out, it’s important to first understand how an NCD works in Singapore.

What you need to know about your No Claims Discount (NCD)

In Singapore, every year you don’t make a claim for an accident, you’ll receive an additional 10% discount on your car insurance renewal.

A No Claims Discount is an entitlement or a discount given on your insurance premium for the following year if no claims or accidents were made on the existing policy.

Consider it a “reward” by the insurance company. After all, you’ve paid them for services that have gone unutilised. As each consecutive year passes with no claims made, your NCD will increase till a ceiling percentage is reached (this often depends on insurer and type of vehicle).

Insurance period without any claimsYour renewal discount
1 year10%
2 years20%
3 years30%
4 years40%
5 years or more50%

At the time of writing this, DirectAsia still holds the record for the highest NCD in Singapore with its NCD60 discount. Customers with a 5-year track record of no claims will accrue an additional 10% on their NCD – giving you a total 60% discount on your renewal premiums!

Great news, right?

The crucial thing to keep in mind is that even though NCDs do accumulate every year, once you make your first claim on an accident, you lose a percentage of your discount.

The percentage you lose varies depending on your car insurance policy and claims amount, but with certain car insurance policies, you could even lose the full discount.

Be sure to choose a policy which doesn’t punish you with a huge reduction in your NCD in the event of an accident. Aviva, for instance, only reduces your NCD by 10% each time you get into an accident – the lowest reduction rate in the market!

If you’re found to be the party who’s not at fault for the accident, not to worry. In this case, your NCD will remain unblemished and you won’t have to worry about a reduction in your discount. However, do bear in mind that this only applies if you’re found to be 100% not-at-fault for the accident.

Should you forfeit your NCD in an accident?

There are a few options as to what to do with your NCD in the event of an accident. The first is to forfeit your NCD in order to claim the hefty costs of the car repairs resulting from the accident. This option makes sense if there has been very substantial damage to the car, you’re in need of coverage for medical expenses or to put it simply, you feel that the costs associated with the accident outweigh the savings you would accumulate for future savings with the NCD.

Of course, in some situations where there has been serious damage and costs of repair and medical expenses are unaffordable on your own without a claim, an NCD forfeit would be necessary along with making a claim. The second option is to fork up your own savings to cover any damages for your car and the other driver’s if you know you’re the driver at fault. This may cost you more for now, but it may make sense to do this if you’ve accumulated a high NCD that will save you more in the long run. This option also usually makes more sense for fender benders and minor accidents where damages aren’t too significant or costly. This way, you keep your NCD intact and make up for the costs incurred from the accident repairs through future premiums which will be kept lower thanks to your discount.

However, there is a third option, and that would be purchasing an NCD protector.

What is an NCD protector?

Essentially an NCD protector is insurance for your NCD. In the event of an accident, instead of losing the percentage of your NCD you normally would, by purchasing an NCD protector you may lose a lower percentage of the discount or are awarded another claim before your NCD is reduced.

In Singapore, NCD Protectors generally cost about 10% of your premium.

Should you pay for an NCD protector?

If you’re concerned about guarding your NCD which you’ve spent years building up, you might want to consider an NCD protector.

Some great options include DirectAsia’s NCD Protector Plus which allows you 1 at-fault claim before your NCD is reduced at all!

Meanwhile, Aviva’s NCD Protector promises no upfront excess payments from customers who are not at fault!

While an NCD protector is great if you’re looking to protect your NCD, it’s important to note that your premium may still rise after an accident.

An NCD protector does not guarantee that your premium won’t rise, it only ensures your NCD does not reduce in the event of an accident, or it reduces to a lesser degree than it would without purchasing the protector.

This is why it’s always best to check with your insurance provider on their own specific terms on how accidents may affect premiums.

How do I choose the best car insurance policy with NCD protection?

If you want NCD protection, or want to switch to a policy which offers it, the great news is that your NCD is transferable from one policy to another as long it’s insuring the same car.

This means that if you’re unsatisfied with your current car insurance policy and its NCD terms, you can look around for another and your NCD remains intact.

So once you’ve decided you need NCD protection and you want a policy which offers it, you’ll want to do some research on the best car insurance policies out there.

When looking for the best policy with an NCD protector, here are a few questions to keep in mind:

  1. How much savings will you accrue with this policy’s NCD protector vs. without one in the event you get into an accident? Is that amount worth the price of the NCD protector?
  2. An NCD Protector prevents an NCD from reducing, but your premiums may still rise after an accident. Be sure to check with your provider on their specific terms with regards to this.
  3. Choosing the best car insurance policy with NCD protection comes down to doing some thorough research in order to maximise your savings on your future premiums.

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