What is NCDP or NCD Protector in Singapore? Should you buy NCDP?

NCDP or NCD Protector is an extra cover sold by insurers in Singapore that protects your No claim Discounts applicable on insurance policies and hence lets you keep your current NCD or reduce it with a lesser percentage based on the number of claims in the policy year.

NCDP is extra and usually, an optional cover offered to customers to protect their NCD.

Before you understand NCDP or NCD Protector, we would recommend understanding how the concept of NCD works. Our detailed guide on what is NCD and how to check it is here

Whenever you make a claim towards your policy, your no claim discount or the discount offered for not making a claim reduces. This will impact your premium on the next renewal. With NCDP in place, the NCD is not reduced, thus making sure your premium for next year (whatever that may be) is discounted by the NCD you currently have or might have.

If you have NCDP or NCD Protector, some insurers will let you keep the same NCD in case of 1 claim. However, they might reduce it a little (not as much as it would have been if you had no NCDP) for more than 1 claims. Certain insurers will also let you advance your NCD to the next level (if you are eligible) if you have NCDP in place. More on that below in on NCDPP from directasia.

However, it is important to know that NCDP may not be available for all insurance customers. Let us look at the requirements for NCDP.

What are the requirements for NCDP cover?

NCDP is offered by insurers only to customers who meet certain requirements. These requirements may differ from insurer to insurer.

Usually, NCDP is available for customers who have a minimum of 30% NCD when purchasing their car policies or 20% NCD for their motorcycle policies.

What are the clauses of NCDP?

Even though NCDP is offered by various insurers in Singapore, each may have its own clauses and thus NCDP may not be interchangeable amongst insurers.

Most insurers list the below clauses on NCDP.

  • Same insurer and non-transferrable clause: Your NCDP or protection on NCD is valid as long as you stay with the same insurer. For example, presume, your current NCD is 50% and it did not move to NCD20 on making one claim because you had signed up for NCD protection. However, if you move to a new insurer for renewal, the NCDP will not be honoured. In this case, the new insurer may only discount your renewal premium at 20% (i.e. NCD20).
  • No renewal guarantee: Even though you have purchased NCDP which promises you the protection of NCD for next year’s renewal, there may not be a guarantee from certain insurers, that they will offer you a renewal. Insurers could reject a renewal if your renewal profile seems very risky to underwrite.

Does NCDP save money and should you buy NCDP?

NCDP is designed to protect your NCD discount and thus save you money in the long run. However as per our opinion, whether NCDP will save you money depends on various situations.

Let us look at an example to understand the various scenarios.

Say, you are a very good driver and have not made any insurance claim on a car policy for 5 years. Thus your current NCD is 50%. So, if a car insurer quotes a premium of S$1000 for your profile, you were expected to only pay S$500 in total, after applying your 50% NCD discount.

Now let’s say the NCDP or NCD Protection costs you an extra 10% of the quoted premium. I.e, 10% of S$500, is S$50 every year for NCDP. So with NCDP, you paid S$550 in total and would have paid S$500 without NCDP.

Now, suppose in an unfortunate event, you had to make a claim. Whether your NCD drops for next years renewal will depend on NCDP and below are the scenarios.

If you did not have NCDP: Your next years NCD will drop to 20%. Thus if your insurer’s quote was S$1000, with NCD20, your next year’s renewal would be S$800. However, this is assuming the next year’s renewal is also S$1000, which is hardly the case. As your car ages, the renewal is expected to increase more. So you will end up paying somewhere more than S$800 for renewal without NCDP.

If you had NCDP: Your next years NCD will stay at 50%. Thus if your insurer quotes you S$1000++ again, your new renewal insurance will be around S$500++. This is a savings of around S$300 minus the cost of NCDP which is S$50 to about S$250. Now since your new renewal premium will be more than S$1000 as your car has aged, let’s consider the savings to be around ~ S$200.

Example (*)Without NCDPWith NCDP
Original Base PremiumS$ 1000S$ 1000
NCD of 50% makes itS$ 500S$ 500
NCDP costS$ 0say 10% = S$ 50
Total current year costS$ 500S$ 550
Next year renewal base premium~ S$ 1100~S$ 1100
Total renewal premium (if claimed)with 20% NCD ~ S$ 880with 50% NCD ~ S$ 600
An example calculation of premium with and without NCDP. (Scroll the table to left or right on mobile devices)

So, as we saw in the example, NCDP may yield you savings in some scenarios. But had your base premium for next year increased drastically, any savings from NCDP will be eaten up by the new renewal premium. 

Ours was an example (*) based on guessed premiums. The actual quoted premium, the cost of NCDP as well as the renewal premium will differ greatly from insurer to insurer as well as for different customer’s profile. It is always best to compare insurance premiums as well as the cost of NCDP and then make the right decision to buy NCDP cover if the savings are higher in your case.

NCDP offered by various insurers in Singapore

NCDP is offered by most insurers in Singapore on car or motorcycle insurance policies. Some insurers have also tweaked the offering a little further to stand out in the markets. For example, DirectAsia offers NCDPP, which is NCDP Plus or NCD Protector Plus whereas FWD markets it as NCD50 for life.

Popular NCDP or NCD Protector covers in Singapore.

NCDPP insurance cover from Directasia

NCDPP or NCDP Plus is offered by Directasia Insurance in Singapore. With this protection, and if you make a claim, the insurer not only retains your current NCD but also lets you advance it ahead for the next year.

For example, if your current NCD was at 30%, and you had purchased DirectAsia’s NCDPP. In this case, with one claim, you would be allowed to keep your NCD30 as it is for renewal with other insurers. However, with NCDPP, the insurer also allows you to advance the NCD. Thus your new NCD of 40% will be effective for renewal premiums.

The same is the case for NCDPP for motorcycle, where NCD20 is allowed to progress to NCD25 or NCD30 which is exclusive with Directasia. 

NCD50 for life insurance cover from FWD

‘NCD50 for life’ is NCDP marketed by FWD Insurance in Singapore. Customers who have NCD50 can have it protected for life even with multiple accidents in the same year if they purchase insurance from FWD and stay with them. This protection however should not be taken leniently, as the fine prints mention clauses where you are required to take due diligence and not fail to take necessary precautions under this policy.

Other insurers who offer NCD Protector

Most insurers in Singapore also offer NCDP. Below are a few found we have listed below.

  • BudgetDirect NCDP
  • NTUC Income NCD Protector
  • AXA NCD Protector

We hope, you now understand the concept of NCDProtector and you will check the various offerings from various insurers and make an educated purchase decision.

Do also check out our article on ways to save on car or motorcycle insurance premium.

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