It is impossible to predict when accidents can happen on the road, but when they do, motor insurance shields us from the financial strains. By law, all cars in Singapore must be insured. The market is filled with numerous options for car insurance, from the type of coverage to the various add-ons that you can pay for.
Spoilt by choice, you may find it difficult to understand whether you need the various additional features that supposedly protect your wallets. Amidst these add-on options, such as Personal Accident Insurance, you will come across No Claim Discount Protection.
Before deciding whether to pay a premium for it, here is a guide to help you understand whether you truly need it.
No Claim Discount Protector Explained
Before understanding what No Claim Discount Protection is, you need to know what No Claim Discount (NCD) is and how it works.
What Is No Claim Discount?
NCD is given to motorists if no claim has been made under their motor insurance policy for a year or more with the existing insurer. As a result, motorists can save even more money as it lowers the price of the premiums that motorists have to pay for each annual renewal of their insurance.
The table below illustrates how NCD is applied across the private car insurance industry in Singapore.
|Period with no claim||Discount on each annual renewal|
|5 or more years||50%|
Having said that, in cases where only a claim for windscreen or window repair or replacement is made, or your car was assessed "not at fault" by your insurer in the accident, your NCD will be unaffected.
What Exactly Is No Claim Discount Protector?
A No Claim Discount Protector essentially protects your NCD by allowing you to make a claim under your policy but still enjoy the benefits of the NCD that you have carefully built up over the years.
While NCD could help drivers save money, the moment an insurance claim has been made, the NCD decreases. Such a situation can be avoided with NCD Protector.
However, do take note that there is a limit to the number of claims that can be filed before you lose your NCD accumulated over the years. This limit is dependent on your insurer and the amount of NCD you have accumulated within the policy year.
How Does It Protect Your NCD?
The table below illustrates how NCD protector protects private car policyholders from losing their hard-earned NCD over the years should they file a claim under their car insurance policy under Budget Direct Insurance.
|Illustration For Budget Direct's No Claim Discount Protector|
|Current NCD||NCD after 1 claim||NCD after 2 or more claims|
|Without NCD Protector||With NCD Protector||Without NCD Protector||With NCD Protector|
|20% and below||0%||0%||0%||0%|
Referencing to the table above, for policyholders with existing NCD of 30% or more, the NCD protector will allow you to retain your existing NCD for your first accident. However, for subsequent claims filed, it would be reduced, depending your insurer. On the other hand, without an NCD Protector, upon your first claim, your NCD will be reduced to a lower percentage if not none.
While it is not able to protect you from your insurer raising the cost for NCD Protector premium, it is able to safeguard the NCD that you have built over the span of five years, reducing its decrease. As a result, such a benefit would outweigh the initial cost of the premium paid for NCD Protector.
Apart from helping drivers save money, having NCD Protector enables drivers to drive with a peace of mind as they can be rest assured that they will not be at a loss should they get into an accident.
While 10% may not seem like a significant amount, the price of car insurance policies are typically in the thousands. As such, the NCD protector will save you hundreds of dollars.
Drawbacks of Paying for No Claim Discount Protector
Despite the fact that NCD Protector has the potential to spare your wallet of some cash, it does have its drawbacks.
It May Be More Expensive in the Long Run
As a great deal of whether purchasing NCD Protector depends on your driving history, purchasing such a cover may end up costing you more.
For newer drivers or drivers who tend to be more accident prone, purchasing NCD Protector may in turn cause you to pay more for your insurance. In the event that you file a claim within the first two years of owning a car, your NCD would not have matured enough to help you cover the costs of paying for the premium. As such, it is important to make the necessary calculations before purchasing any optional covers offered by insurers in order to pay only for features that you need and find the cheapest car insurance for yourself.
It Is Non-transferrable Between Insurers
Unlike NCD, NCD Protector is not transferable between insurers. As a result, insurance companies often use such a cover to prevent them from losing customers. As NCD Protector will only benefit you in the long run, with 3 years being the minimum, it discourages buyers from not renewing or cancelling their policies.
Looking for the Cheapest Insurer Offering No Claim Discount Protector?
Having learned the various pros and cons of purchasing NCD Protector, you may be looking for the cheapest car insurance company in Singapore offering NCD Protector with competitive car insurance quotes.
As such, we have ranked the top three insurers who offer NCD Protector cover at competitive prices alongside other covers such as Personal Accident Premium.
BudgetDirect prides itself as an insurer that offers the cheapest customisable car insurance with premiums 40-46% below market average for drivers with 50% NCD, buyers with a smaller budget can consider choosing Budget Direct Car Insurance. Apart from offering competitive rates for their NCD Protector, they also boasts a customisable insurance plan with optional add-ons such as personal accident and medical coverage, 24-hour roadside assistance, modifications and accessories coverage as well as loss of use transport allowance.
With budget-friendly plans that offer premiums around 20-30% below the market average, Aviva’s NCD Protector costs $60.74. For those looking for optional add-ons apart from NCD protection, Aviva also has the optional add-ons such as additional personal accident and loss of use.
While FWD Car Insurance tends to favour experienced drivers, they offer competitive prices for their plans and offer options; coverages such as NCD Protector and a choice to service your at any workshop.
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