How is the discount calculated
NCD is based on the number of full years you have held an insurance policy without making what insurers call a fault claim. A fault claim is one where insurers have not been able to recover all the costs from elsewhere. NCD, then, doesnt relate to your driving record, it only reflects how long one policy in your name has not cost the insurance company any money.
The discount scale will vary between insurers, but it is usually capped at around 5 years, meaning ten claim-free years will only earn the same discount as five.
What happens if I make a claim
Once you have a fault claim on your policy, your NCD usually steps down by two or three years. If you havent clocked up this many years youll have zero discount at renewal. If you have more years than the highest bonus offered, it will still only step down from that figure.
For example, your insurer offers 70% discount at 5 years, but no more after that. In a fault claim situation, they reduce the bonus by two years. This effectively means that five or more claim-free years will be reduced to three.
Claims for windscreen damage and any that are found to be non-fault will not affect your discount. In the event that liability is disputed, a claim will normally be classed as fault until liability is proven in your favour, at which time any related increase in your premium will be refunded. Remember, any claim where full costs are unable to be recovered from another party, including 50-50 outcomes, will always count as fault claims.
How do I qualify for NCD
NCD will be calculated based on the claims record of a policy in your name and cannot be used on more than one policy at a time (a second policy in your name usually has to earn NCD in its own right). As it is the policy that qualifies, not yourself, named drivers usually do not receive NCD as they have not held a policy in their own name. Accepting that customers shop around, insurers accept NCD proof from other companies as long as that policy is no longer in effect.
Based on the tenet of ultimate good faith, insurers will give you the number of years discount you tell them you have, but they will always require proof within a given period of time. They will tell you what you need to provide but often your renewal invitation will suffice.
Good news
It can hurt our pockets when were starting out or when we lose our discounts, and its always advisable to ask insurers exactly what their No Claims Discount policy is so you know where you stand. However, nowadays you can protect higher levels of NCD and there are many other discounts available including introductory discounts and other deals so it often pays to ask what the sales advisor can do for you.
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