【Car Insurance】When buying car insurance, you often hear NCB or NCD. What are they?

In Hong Kong car insurance, "NCB" or "NCD" is a very common term, which is No Claim Bonus (No Claim Bonus) and No Claim Discount (No Claim Bonus) respectively. They have the same meaning, but the names are different. The following is a detailed introduction:

What is NCB/NCD?

NCB / NCD means that if you do not make any claims to the insurance company during the policy year (i.e. no traffic accidents or losses requiring compensation), the insurance company will give you a discount on the next year's premium as a reward when you renew your policy. This system is designed to encourage car owners to drive carefully and reduce the number of accidents and claims.

How it works

• NCB/NCD is usually accumulated on an annual basis, meaning you can get a higher discount for each year without a claim.
• Generally speaking, you can get a 20% discount if you don't have any claims in the first year, 25% in the second year, 30% in the third year, and so on, up to a maximum of 60% (there will be slight differences between different insurance companies).
• If there is a claim during the policy year, the NCB / NCD will be reduced or reset to zero, depending on the number of claims and the insurance company’s policy. Some companies will only reduce one level, while others will cancel it completely.
• Some insurance companies offer a "NCB / NCD protection" service, which allows you to retain your NCB / NCD even if you make one claim (usually only once).

Example

Assuming that you do not have any NCB/NCD in the first year of insurance, there will be a 20% discount on the premium when you renew the policy in the second year because there are no claims. If there are no claims in the third year, the discount will increase to 25%. In this way, the maximum premium discount can be 60%. If there is a claim in a certain year, the discount will be reduced or zero when you renew the policy in the second year.

Features of NCB / NCD

• Personalisation: NCB/NCD usually stays with the owner rather than the car and can be transferred to a new car when changing vehicles.
• Changing insurance companies: Most insurance companies will accept your accumulated NCB/NCD from other companies, but they will require appropriate supporting documents.
• Not applicable to all types of insurance: NCB/NCD is mainly applicable to full car insurance. Some companies offer triple insurance, but the proportions and conditions may be different.

Summarize:

NCB / NCD is a premium discount in car insurance that rewards safe driving and reduces the number of claims. It increases with the number of years without claims and can reduce the premium by more than half. If a claim occurs, the discount may be reduced or lost. This system helps encourage car owners to drive more carefully and effectively control premium expenses.