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Guide To Understanding How No-Claims Discount (NCD) Works & How To Maximise It As A Safe Driver

Safe and responsible drivers are rewarded.

This article was written in collaboration with DirectAsia. All views expressed in this article are the independent opinion of based on our research. is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

In Singapore, it’s compulsory to purchase motor insurance before we can legally drive our cars on the road. Given the high cost of car ownership in Singapore, it’s logical that car owners will want to take good care of their cars.

Protecting our cars come in two ways. Firstly, we want to buy comprehensive motor insurance coverage. The comprehensive motor insurance coverage covers all third-party claims, as well as damages to our vehicle. With these insurance policies, we are buying coverage that protects us from potential third-party liabilities, as well as damages incurred on our vehicle. They also tend to be more expensive compared to third-party-only motor insurance, which only covers damages to other parties’ properties but not our own cars.

The other way to protect our car and ourselves is by being a safe driver. This means sticking to the speed limit, driving without distractions and adopting defensive driving habits at all times.

As it is, staying safe on the road for ourselves and others should be all the incentive we need. However, there are indeed financial benefits to doing so.

To avoid a moral hazard issue, where drivers behave more recklessly on the road because they know they are covered by motor insurance, there is a No-Claims Discount (NCD) system in Singapore.

What Is No-Claims Discount (NCD) And How Does It Work?

As explained by General Insurance Association (GIA) Singapore, NCD is an entitlement given to drivers if no claim has been made under our policy for a year or more with the current/existing insurer.

NCD reduces the insurance premium that we have to pay on our motor insurance plan for the following year. This is the insurer’s way of recognising and rewarding us for being a careful driver. There is a standard followed by all insurers in setting the NCD, depending on your type of vehicle and the period of insurance with no claim.

Source: GIA

For example, a new car driver will not enjoy any NCD. However, after driving for 5 years with no claims, they can enjoy a discount of 50% NCD. This means with all other factors being equal, they will be paying lesser for their motor insurance coverage.

What Happens To Our NCD If We Make A Claim?

If we make a claim and are found to be liable for the damages, our NCD will be affected. The reduction in our NCD will depend on our current NCD.

Source: GIA

If our NCD is currently 50% and we make a claim, it reduces to 20% during the renewal for the next policy term. If it’s 40%, it reduces to 10% during the next renewal. If it’s 30% or lesser, it goes down to 0%. If there are two or more claims within a policy term, it will be reduced to 0%.

It’s worth noting that our NCD will be affected if we are at fault in an accident involving another vehicle. However, if we submit a claim but are found to be not at fault for the accident, then our NCD won’t be affected.

Can I Enjoy An NCD Of More Than 50%?

Typically, the maximum NCD we can enjoy for our motor insurance is 50%. This means that even if we have been safe drivers who have not made any claims for 10 years or more, we still only enjoy a maximum NCD of 50%.

However, DirectAsia is now offering a NCD60 coverage – a first in Singapore. NCD60 provide drivers who have held NCD50 for the last 5 years a discount of 60% off their motor insurance premiums. For example, if you are someone who has been driving for 11 years and has never got into an accident, you would have enjoyed the 50% NCD upon the sixth year of your insurance renewal and be holding the 50% NCD for five years consecutively since. As such, you would be eligible for NCD60 offered by DirectAsia, allowing us to enjoy a greater discount.

How NCD Protector Works

Given how much NCD can reduce our insurance premiums, there is value to protect it.

Besides ensuring that we don’t get involved in an accident, another way of protecting our NCD is by getting an NCD protector included in our motor insurance policy. With an NCD protector, our NCD won’t be affected even after we make one claim (that we are deemed to be at fault) from the insurer. The NCD protector will protect our NCD from the first claim.

Source: DirectAsia

For example, if we are already enjoying the NCD60 coverage with DirectAsia and unfortunately meet with 1 at-fault claim, the ‘NCD Protector Plus’ will cover us so that we don’t lose our NCD. We will only be penalised from the second and subsequent claim onwards.

With DirectAsia, we can choose to enhance our coverage by adding features such as the NCD protector to our motor insurance plan. We can also add in other features (such as $0 excess, 24-hour breakdown assistance, medical expenses) that we want and exclude items that we do not need. The result is that we get a competitive quote that is customised towards what we want for our motor insurance plan. We can also enjoy a discount if we opt for paperless policy, install and maintain an in-car camera.

The advantage with customised plans is that we only pay for what we want, allowing us to save on what we don’t need. This is on top of the NCD60 coverage that we may also qualify for.

If you are keen to consider buying a motor insurance plan with DirectAsia, you can enjoy a special $150 eCapitaVoucher when you get a new car insurance with them. You can get an accurate quote from them online today based on your driving experience, NCD and the requirements you want for your motor insurance.

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