Will my car insurance premium increase even if I bought a NCD protector?

While it protects your NCD, your insurance premium may still increase after a claim due to other factors like accident severity or fault determination.

Is NCD Protection For Your Car Really Necessary?

In Singapore, an NCD protector, or No Claim Discount protector, is an optional add-on feature for car insurance policies. As car insurance premiums are expected to increase as much as 10% in the second half of 2023, it is only natural for car owners to review their existing car insurance benefits and policies to see if they’re making a cost-effective decision.

One of the key benefits that many car insurance plans offer is the NCD protection. The NCD is a discount that policyholders receive on their car insurance premiums as a reward for not making any claims during the policy period, and is meant to incentivise safe driving and responsible behavior. If you have yet to get NCD protection for your car or are still considering it, here is a quick guide on what NCD protection is about and whether it is worth getting for your car.

How Does An NCD Protector Work?

If you have an existing NCD Protector and you make a claim, your NCD will not be affected, which means that you will still be eligible for the same discount on your premiums when you renew your policy.

Discounts per year:

NCD levels typically start at 0% and increase each year without a claim, usually up to a maximum of 50% or more. The higher your NCD level, the greater the discount on your insurance premiums.

Add-ons:

When you purchase an NCD protector add-on, it essentially safeguards your current NCD level for a certain number of claims during a specific period (usually 12 months).

Protection limits:

The NCD protector has limitations, such as a maximum number of claims you can make while keeping your NCD intact. Commonly, insurers allow policyholders to make one or two claims without affecting their NCD.

Claims impact:

If you have NCD protection and make a claim covered by your policy, your NCD level will not be reduced. Instead, it will remain at the same level as before the claim, preserving the associated discount on your premiums.

Claims exceeding limits:

If you exceed the maximum number of claims allowed by the NCD protector during the coverage period, your NCD may be reduced, and your premiums could increase accordingly.

Policy renewal:

When you renew your car insurance policy after the NCD protector has been used, you will typically need to purchase the protection again to maintain its benefits for the upcoming policy year.

It is important to note that NCD Protectors do not cover all types of claims. For example, some insurers may not cover claims that are caused by reckless or negligent driving. It is important to check with your insurer to understand the specific terms and conditions of your NCD Protector before you purchase it.

Whether or not you should purchase an NCD Protector depends on your individual circumstances. If you have a high NCD, it may be worth considering purchasing an NCD Protector to protect your discount. However, if you have a low NCD or you do not drive very often, you may not need to purchase an NCD Protector.

Pros & Cons Of Having NCD Protection

Pros

NCD protector helps you maintain your No Claims Discount even if you make a claim, preventing it from resetting to zero
Helps you save money in the long run by preserving your NCD, which can result in lower insurance premiums
Provides peace of mind knowing that a single claim won't negatively impact your NCD, allowing you to claim when necessary without fear of increased premiums
Useful if you get into an accident that is not your fault but cannot claim from the responsible party's insurance (e.g., uninsured driver)
Provides flexibility to make a claim without worrying about losing your NCD, which can be particularly beneficial for drivers with a high NCD percentage
It can be beneficial if you switch insurance providers as your preserved NCD can help you get competitive rates with the new insurer
Some NCD protectors allow for multiple claims within a specified period without affecting your NCD, offering even more protection

Cons

NCD protectors often have limitations on the number of claims you can make while keeping your discount intact (e.g., usually 1-2 claims per year)
NCD protectors typically come at an additional cost, which can increase your insurance premiums
If you are a careful driver with a strong NCD history, you may not need an NCD protector, making it an unnecessary expense
NCD protectors do not protect high-risk drivers from premium increases resulting from frequent claims
While it protects your NCD, your insurance premium may still increase after a claim due to other factors like accident severity or fault determination
NCD protectors often have specific conditions and terms that must be met, such as not making claims for certain types of accidents (e.g., hit-and-run)

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Average Cost Of NCD Protection For Cars In Singapore

You should always consider the cost of an NCD Protector when making your decision on whether to get one or not. If the cost of the NCD Protector is more than the amount of money that you would save on your premiums if you made a claim, it may not be worth purchasing

The average cost of NCD protection in Singapore varies depending on the insurer, the type of car you drive, and your NCD. However, as a general guide, you can expect to pay around 5-10% of your car insurance premium for NCD protection. Here is a table comparing the average cost of NCD protection from some of the major insurers in Singapore:

	Insurer	Average cost of NCD Protection
	InsurerSinglife	Average cost of NCD Protection$60.74
	InsurerFWD	Average cost of NCD Protection$70.89
	InsurerMSIG	Average cost of NCD Protection$68.75
	InsurerSingtel	Average cost of NCD Protection$65.53
	InsurerAllianz	Average cost of NCD Protection$72.36
	Insurer*Figures are subject to changes as per each insurance company’s discretion. All information was updated at the time of writing on 9 October 2023

Assess your NCD history

Consider your current NCD level and your history of claims. If you have a high NCD (e.g., 50% or more), protecting it may be more valuable because it represents a substantial discount on your premiums.

Evaluate your risk profile

Assess your risk tolerance and driving habits. If you're concerned about the financial impact of a claim or you drive frequently in high-risk areas, NCD protection can provide peace of mind.

Review the costs vs. benefits

NCD protection typically comes with an additional premium cost. Calculate the potential savings on future premiums against the cost of the protection to determine if it's cost-effective for you.

Compare quotes

Do a comparison of quotes from multiple insurers. This is the best way to ensure that you are getting the best possible price.

Ask about discounts

Many insurers offer discounts for NCD protection, such as multi-car discounts or discounts for good drivers.

Consider your needs

Do you need a lifetime NCD protector or will a one-year policy be sufficient? Choose the policy that best suits your needs and budget.

Frequently Asked Questions

What is an NCD protector add-on?: An NCD protector add-on safeguards your current NCD level for a certain number of claims during a specific period (usually 12 months).
Will my car insurance premium increase even if I bought a NCD protector?: While it protects your NCD, your insurance premium may still increase after a claim due to other factors like accident severity or fault determination.