What is No Claims Discount (NCD) and How Does It Work?

There are many costs to consider when it comes to owning and operating a car in Ireland. 

Equally, there are many savings you can make, depending on your decision-making and driving experience. One such long-term way to bring your costs down is to avail of a no claims discount (NCD).

What is a No Claims Discount?

How does an NCD work? Simply put, a no claims discount is a bonus discount that you receive for every year of your insurance policy in which you didn’t make a claim on your insurance. 

For instance, at AIG, you could save up to 65% on your car insurance policy if you have six years or more of claim-free driving under your seatbelt. 

No claims = the chance of reducing your overall car insurance costs. 

Building and Maintaining Your NCD

Earning an NCD

As noted, an NCD is essentially a reward for claim-free driving over a period of time, under the terms of your insurance policy. 

The longer the amount of time you’ve put in on the road without making a claim, the bigger the eventual discount. 

NCD Duration

How long does an NCD last? Usually, it remains valid for two years from the date that your last policy in your own name comes to an end. 

If more than two years has elapsed by the time your policy has expired, your NCD is no longer valid and resets to zero. 

Losing Your NCD

Any claim that you do make under your existing car insurance policy, even in the event of an accident or situation that isn’t directly your fault, will result in the possibility of losing your NCD and the potential of a rise in your premium upon renewal. Individual cases may vary. 

The amount you will lose depends on how many claim-free years you have registered to date, and the specific policy you agreed with your insurer. 

NCD for Named Drivers

Do you get a no claims discount as a named driver? Generally not, as the NCD is exclusively reserved for the main driver and chief policy holder’s driving experience. 

AT AIG, we offer Introductory No-Claims Discount which is when an amount is allowed to reduce your car insurance premium in recognition of the number of years of consecutive claims free driving as a named driver on another person’s car insurance policy.

NCD Proof and Verification

Proving Your NCD

Naturally, you will need to provide some form of proof when it comes to the process of maintaining and ultimately availing of a no claims discount. 

If you have a previous insurer, they should have sent you details of your no claims discount to accompany a renewal offer. If not, you can contact them and request it. 

First-time drivers won’t have any previous NCD details to hand, of course. 

Checking Your NCD

You may well be wondering how to check your current NCD on your car insurance. You should be able to log in to your insurer’s website and check your personal details there. 

Alternatively, you may contact your insurer directly and speak to an agent, and/or request a letter to be sent out to you. 

Calculating Your NCD

How to calculate NCD? It’s pretty straightforward, thankfully. 

As noted, it all depends on the amount of miles and time you have logged on the road without making a claim against your insurance policy. 

At AIG, we offer a no claims discount of up to six years. Each consecutive year that you record claims-free adds an additional discount to your policy. 

Using your No Claims Discount

Using NCD on Multiple Cars

Can you use your no claims discount on two cars or more? In a way, yes. 

Your NCD should still apply, providing you have a multi-car policy in place. However, it must be noted that the NCD applies to you, and not the vehicles in question. 

Essentially, if you have switched to another car, you may transfer your existing policy and its related no claims discount history to the new vehicle. 

The NCD only applies to the use of one vehicle at a time. Attempting to apply it to more than one vehicle simultaneously will be regarded as fraud, and you could be penalised as a consequence. 

Transferring Your NCD

If you’re switching insurance companies, you can bring your existing NCD record along with you. 

Your previous insurer will have sent you the relevant details upon their offer of renewal. If you haven’t received this information, you can contact them directly to request it. 

Once you have what you need, simply provide it to your new insurance company. Be advised, though - if you break your current agreement before the 12-month period is finished, you won’t earn your NCD for that year. 

NCD and Car Insurance Quotes

As with the many factors that inform your overall insurance quote, the very concept of the no claims discount has a major say. 

New drivers can’t avail of an NCD, due to the fact - and notable knock-on financial cost - of first-time drivers having no road experience and thus being harder to insure at a baseline level. Drivers with years of claim-free experience on their record, however, indicate a much lower-risk profile, and thus will likely benefit from a lower premium. 

For people with experience as a named driver on another person’s car insurance, an introductory no claims discount can reduce your car insurance premium in recognition of the number of years of consecutive claims free driving on that other person’s policy. 

No Claims Discount Protection

You may be able to protect your NCD, but is no claims discount protection worth it? 

Let’s look at the two types that could be available for you: 

• Step back protection applies automatically once you have three or more years of an intact no claims discount on your record. In the event of a claim, you will not lose your full bonus, though it will be reduced. 

• A protected no claims discount, meanwhile, applies if you opt to pay extra to protect your NCD. Once you have three years or more of an intact NCD, you may make two claims in a three-year period under insurance without affecting your no claims discount. To note, this does not protect your premium.

Conclusion

Remember, the crucial point of a no claims discount is to encourage safe driving. Your welfare - and that of others - on the road should be in your mind at all times, and your commitment to a safer driving experience for all is duly acknowledged in the form of the highly beneficial NCD. 

With AIG, you could save up to 65% on your car insurance policy if you have six years or more of claim-free driving on your record. 

Check out our range of options, including custom-made policies for young drivers, and added peace of mind with our comprehensive model.