Building up a substantial NCD can lead to significant savings on insurance costs over time.
- Accumulating NCD: Each year that you hold an insurance policy without making a claim, you earn a higher level of NCD. The discount usually starts at around 10% for the first claim-free year and increases incrementally with each subsequent year without a claim. Some insurers offer accelerated NCD, where you can earn a higher discount for every claim-free year.
- Reduction in Premium: The NCD is applied as a discount on your insurance premium when you renew your policy. For example, if you have a 50% NCD, your insurer will reduce your premium by 50%.
- Protection of NCD: Some insurers offer NCD protection as an optional extra. This means that even if you make a claim, your NCD level remains unaffected. However, there are usually limitations on the number of claims you can make while still retaining your NCD protection.
- Transferring NCD: In many cases, you can transfer your NCD when you switch insurance providers. This allows you to continue benefiting from the discount even if you change insurers.
- Loss of NCD: Making a claim typically results in a reduction or loss of your NCD, which can lead to an increase in your insurance premium. However, some policies may have provisions for “no-claims forgiveness” where you can make a claim without losing your NCD, usually once within a certain period.
Overall, building and maintaining a high NCD can lead to significant savings on your car insurance premiums over time, making it a valuable incentive for safe driving and responsible behavior on the road.
