Does NCD/NCB follow the person/vehicle? Car Insurance Q&A
Can car insurance get cheaper the longer you buy it? Does NCD/NCB depend on the person and the vehicle? Currently in Hong Kong, both "three-insurance" and "comprehensive insurance" generally offer "No Claims Discount (NCD/NCB)". To get the maximum premium discount, the key is safe driving and maintaining a no-claims record! In this feature, we will highlight the key points about no-claims discounts and answer frequently asked questions such as whether NCD/NCB depends on the person and the vehicle
What is NCD/NCB?
No-claim bonus/discount, abbreviated as NCB/NCD, is a discount offered by the insurance company if the policyholder has no claims history for a period of time. While NCB and NCD mean the same thing, NCD is more commonly used because the discount is a monetary amount rather than a monetary reward
The calculation method for No Claim Discount (NCD) for private cars is as follows: if the policyholder does not make any claims in the first year, the premium will be reduced to about 20% in the second year (20% no claim discount), and about 30% in the third year (30% no claim discount). The no claim discount increases by 10% each year, accumulating to 60% in the fifth year as the maximum discount, which means that the renewal premium will remain at about 40% each year thereafter
Below are the insurance premiums for two popular car models. This is for reference only; the actual premium may vary depending on other factors
| NCD/NCB No-Claim Discount | Honda Freed | Audi Q5 |
|---|---|---|
| 0 | $3,800 | $4,000 |
| 20 | $2,880 | $3,070 |
| 30 | $2,540 | $2,740 |
| 40 | $2,200 | $2,410 |
| 50 | $1,870 | $2,080 |
| 60 | $1,530 | $1,740 |
Do NCD/NCB expire?
The expiration date varies depending on the insurance company, but generally, the No Claims Discount (NCD) expires 12 months after the policy is cancelled or terminated. This means that if you haven't purchased auto insurance for more than a year, your No Claims Discount record will be recalculated on your new policy, even if you previously had a 60% NCD, it will start from 0% NCD
Can NCD/NCB be transferred to a vehicle associated with a person?
In simple terms, NCD/NCB transfers are based on the person, not the vehicle. For the same vehicle owner, one NCD will only be applied to one vehicle. Therefore, if an owner owns multiple vehicles, they will have more than one NCD. Below is a brief introduction to NCD transfers in different scenarios
Change insurance company
For transfers between local insurance companies
in Hong Kong, almost all car insurance companies offer NCD (No Claims) benefits. When you switch from one insurance company to another, you only need to present your old policy or provide written evidence proving your NCD and the period of no claims, and you have a high chance of enjoying the same NCD benefits at the new company.from an overseas insurance company to a local one
is largely the same. To enjoy the same NCD with the new insurance company, you need to obtain a certificate of insurance from your previous insurance company proving that you have not made any claims in the past twelve months.Change car
vehicle
, you can transfer your NCD from your company car to your private car by obtaining the NCD transfer consent form from your company's authorized representative.
depending on the vehicle type:
private car, commercial vehicle, and motorcycle. Therefore, NCD is not universally applicable. For example, if you sell your motorcycle and buy a family car, your NCD will reset to 0%.
Replacement
Transferring to different vehicles under your name:
If you own multiple vehicles, each will have its own NCD, and you can transfer the NCD from one vehicle to another.
When transferring a vehicle to a different name,
remember that the NCD/NCB is transferred with the person, not the vehicle. You can still keep your NCD when you sell the car to someone else, but the new buyer cannot use your NCD.
Should I notify my insurance company in the event of an accident? Will an accident leadto the cancellation of my NCD?
For private car insurance, most insurance companies have a no-claim discount (NCD) reduction mechanism; the NCD will not be cancelled due to a single claim. Generally, if a claim occurs, the insurance company will withhold the NCD, rendering it unusable. When the case is settled, if the insurance company needs to make a payment, 30% of the policyholder's NCD will be deducted. Assuming the policy has a maximum NCD of 60%, the policyholder's no-claim discount will be reduced by 30%, and so on
If the accident is caused by the other party, will my NCD be deducted?
Even if the accident is not caused by the policyholder, the policyholder may still lose some or all of their NCD. However, some insurance companies offer no-claim discount coverage, meaning that the policyholder's NCD is still covered even if they file a claim
If someone else has an accident while driving my car, will it affect my NCD?
Even if the car owner is not the driver, an accident can still affect the owner's NCD (No Driver's Certificate), depending on the insurance company's regulations and terms. Therefore, it is recommended that car owners be extra careful when lending their cars to others, ensuring that the borrower has a valid driver's license and driving experience
Claims Tips
In theory, after a traffic accident, the vehicle owner must notify the insurance company within 24 hours; however, the final decision on whether to claim compensation is entirely up to you. Some drivers weigh the pros and cons of "settling privately and paying expenses" against "losing the NCD" to save as much money as possible. We recommend that vehicle owners notify the insurance company as soon as possible in any situation. Since a third party has the right to file a civil claim against the vehicle owner within three years, timely reporting of the accident allows the insurance company to cover part of the compensation. The vehicle owner can then request to cancel the claim and retrieve the original NCD after the incident is fully resolved
It's advisable to compare different providers for NCB/NCD calculation methods
Currently, different insurance companies have different NCB/NCD policies, so car owners are advised to compare prices from multiple companies or consult a professional financial advisor directly. Worried about hard selling or wasting time communicating with different insurance agents? AWM has compiled car insurance quotes from major insurance companies for you, with live customer service to assist you with questions and provide quotes. Car owners can choose the most suitable car insurance plan according to their needs, providing comprehensive protection for you and your vehicle