No Claim Discount (NCD/NCB) | How to Calculate NCD and Lower Car Insurance Premium

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moneyhero

Last Updated 26 July, 2022

Every car owner must have seen the term No Claim Discount (NCD) when purchasing car insurance, and NCD is a significant factor affecting premiums. What exactly is NCD? Is it the same as NCB? MoneyHero answers the questions in the following article, and explains how NCD is calculated and how it affects your car insurance premium!

What is NCD?

NCD is a premium discount offered to a policyholder for not claiming for a certain period of time. NCD is the same as No Claim Bonus (NCB); just the wording differs. As NCD is a form of premium reduction, not a monetary reward, NCD is more commonly used to show its discount feature. NCD accumulates over the years; in other words, keeping a good record can significantly lower the premium. Remember to report your NCD truthfully when you are buying car insurance!

How to Calculate NCD?

NCD accumulates over the years and has an upper limit. NCD generally starts from 20%. But Zurich’s car insurance is an exception. It has a unique claim-free discount (CFD) feature, starting from 30%, 35% in the second year and 45% in the third year, and will only revert to the regular insurance discount rate from the fourth year onwards, as shown in the following table:

Year

General Car Insurance (Commercial Car)

General Car Insurance (Private Car)

Zurich’s Motorplus Insurance Plan (Private Car)

Less than 12 months

0%

0%

0%

1st Year with No Claim

10%

20%

30%

2nd Year with No Claim

20%

30%

35%

3rd Year with No Claim

30%

40%

45%

4th Year with No Claim

30%

50%

50%

5th Year with No Claim

30%

60%

60%

6th Year with No Claim

30%

60%

60%

For example, a 30-year-old car owner with 2 years of driving experience and a Toyota Camry 2.5 private car manufactured in 2021 purchases comprehensive insurance from AIG and Bank of China Group Investment Limited (BOCGI); the premiums are as follows:

Insurance

No claim is made within 1 year (20% NCD)

No claim is made within 5 years (60% NCD)

AIG Auto Insurance (Comprehensive Plan)

HK$12,540.65

HK$6,270.33

BOCGI Motor Insurance - Private Car (Comprehensive Insurance)

HK$11,056.58

HK$5,528.29

*The above information is just for reference only. Several factors determine the premiums, such as driver’s age, driving experience, job nature (e.g. driving frequency), NCD, etc. Please check with the insurer before buying car insurance

Assuming a car owner has not made any claim from the insurer for 5 years, the premium can be discounted by 60% when renewing the policy, which is half of not claiming for one year! If the car owner continues not to make any claim, the premium discount will be maintained at 60% with the same coverage.

NCD Comparison

Although NCDs are more or less the same among insurers’ insurance plans, the details of their coverage vary. To get the most suitable car insurance policy, it is also important to check the NCD protection!

Insurer

Allianz

Zurich

FWD

AIG

Ping An

Product Name

Allianz Private Car Insurance Plan (Comprehensive Plan)

Motorplus Insurance Plan (Comprehensive Plan)

MotorSmart Plus Comprehensive Insurance

Auto Insurance (Comprehensive Plan)

Comprehensive Insurance

NCD Protection

Claims not exceeding HK$100,000 within one year can retain the original NCD  

Claims not exceeding HK$50,000 within one year can retain the original NCD

Claims not exceeding HK$60,000 or 15% of the estimated car value within one year , whichever is lesser, can retain the original NCD    

Claims not exceeding HK$60,000 or 15% of the estimated car value within one year , whichever is lesser, can retain the original NCD 

Get Quotes Online, Simple and Secure

When buying a car, many people would appoint a car dealership or agent to handle their car insurance for convenience purposes. However, to clearly understand the protections, it is strongly recommended that car owners/car-owners-to-be compare and select the appropriate car insurance by themselves. MoneyHero offers instant online car insurance quotes. All you need to do is enter your basic information to get instant premium quotes for most car models. It is very simple and convenient!

Is NCD transferable?

In some cases, yes!

  • Transferring to another vehicle of the same type under your name: Yes.
  • Transferring to another type of vehicle: No, if you transfer from a private car to a motorcycle, the NCD will be reset to zero.
  • Transferring from a company’s commercial vehicle to a private car: Yes, provided that the employer agrees.
  • Transferring to another insurer: Yes, if you transfer within 12 months of termination or cancellation of the policy and submit the relevant supporting document.
  • Transferring from an overseas insurer to a local insurer: Yes, same as above, transfer within 12 months of termination or cancellation of the policy and submit the relevant supporting document.
  • Transfer as a named driver: No, as there is no claim record.
  • Transferring to a new buyer when selling a car: No, as NCD is associated with a person, not a car.

It is important to note that NCD is time-limited, usually 12 to 24 months. If an owner sells a car without transferring the NCD to a new car in time, the NCD will be withdrawn as it expires.

Should I Claim When an Accident Happens?

When an accident happens, car owners should report it to their insurers within 24 hours. However, whether to make a claim is entirely up to the owner. Most insurers offer a “step back system” that would not void (reset to zero) the car owner’s NCD even if the car owner makes a claim.

Assuming a car owner is in his fourth year of no claim (with a 50% discount), under normal circumstances, even if he claims due to an accident, he will still be entitled to a 20% discount (i.e. stepping back to the NCD of 20% for making no claim in the first year) upon renewal of the policy, as shown in the following table below:

Year

General Car Insurance (Private Car)

Zurich’s Motorplus Insurance Plan

(Private Car)

Less than 12 Months

0% → 0%

0% → 0%

1st Year with No Claim

20% → 0%

30% → 0%

2nd Year with No Claim

30% → 0%

35% → 0%

3rd Year with No Claim

40% → 0%

45% → 0%

4th Year with No Claim

50% → 20%

50% → 30%

5th Year with No Claim

60% → 30%

60% → 35%

However, please note that this system is only applicable to private car drivers. If a claim is made by a policyholder of another type of car, the NCD will be reset to zero. Therefore, you should weigh “losing NCD” against “settling the repair cost/compensation in private” and choose the less costly option. If a car owner has accumulated a high level of NCD, settling in private is a better option for minor accidents. But be aware that if a third party is involved, there is a risk of the third party demanding exorbitant compensation.


NCD is undoubtedly an excellent way for car owners to reduce the burden of car insurance premiums. Still, making a claim or not depends on the size of the accident and the NCD accumulated; car owners should make the right choices to get the best protection for themselves and their cars.