No Claim Discount (NCD/NCB) Calculation + FAQs 2025 | How to Calculate Car Insurance Discount Rates

As the name suggests, a no claim discount means that when a policyholder has not made any claims for a period of time (measured in years), the insurance company will provide a corresponding percentage of premium discount when renewing the policy next year, usually 20% - 60%.

No Claims Discount is the full name of No Claims Discount, which is unique to auto insurance and has later been applied to other insurances, such as health insurance. No Claims Discount and No Claims Bonus actually mean the same thing, but insurance companies now use "No Claims Discount" more often to highlight the nature of the discount and avoid policyholders misunderstanding that the insurance company will provide monetary rewards.

Because a no claims discount can significantly reduce the annual premium for auto insurance, policyholders should specify the amount of no claims discount they have when obtaining auto insurance quotes to ensure an accurate quote.

The discount rate for no claims discount varies from insurance company to insurance company, but increases annually from 20% to a maximum of 60%. The calculation method of the no-claim discount rate for private cars is slightly different from that for motorcycles and commerical vehicles, which start at 10% and go up to 30%.

No Claim Discount for Private Cars/Motorcycles/Commercial Vehicles

1. Your NCD will be reset to zero

• when you renew your policy next year in the following circumstances:

• Have NCD of 40% or less and make 1 claim in the policy year

• With 50%/60% NCD and 2 claims in the policy year

2. Your NCD will be deducted when you renew your policy next year in the following situations:

• With 50%/60% NCD, if you make one claim during the policy year, the insurance company will deduct part of the NCD according to the "discount rebate mechanism"

• 60% no claims discount becomes 30% when you renew your policy next year

• <p50% no claims discount becomes 20% when you renew your policy next year

Please remember that the above no-claim discount "discount rebate mechanism" usually only applies to private cars. Other types of vehicles will generally lose their no-claim discount in the following year if there is only one claim.

Transfer from local insurance companies

If you want to change insurance companies, you only need to purchase a new policy within 12 months after the old policy ends or is cancelled and provide relevant NCD supporting documents (such as the old policy), and you will have the opportunity to transfer your NCD to the new insurance company. However, please note that the method of calculating NCD may not be the same for each insurance company.

Transfer from overseas insurance companies

For foreigners who have just arrived in Hong Kong, the steps for transferring NCD are similar. If you want to enjoy the same NCD with the new insurance company, you will need to obtain a certificate of insurance from your previous insurance company to prove that you have not made any claims in the past twelve months.

Transfer from commercial vehicle to private vehicle

You can transfer your NCD from your company car to your personal car. You just need to obtain a consent letter for NCD transfer from your employer or their approved representative.

<h3Go to a different vehicle type

Non-transferable NCDs for different categories of vehicles. For example, if you sell your truck and buy a motorcycle, your NCD will be reset to 0%.

Transfer to a different vehicle under your name

NCD follows people, not cars. If you own multiple cars, each will have its own NCD, and you can transfer the NCD from one car to another.

To a vehicle under a different name

NCD follows people, not cars. Even if you sell your car to someone else, you still keep your NCD and the new buyer will not get your NCD.

Transfer with a named driver

If you primarily drive a company car, or are a named driver on another policy, you will not have a no claims record in these circumstances and so will not be able to transfer your NCD.

Some insurance companies will offer No Claim Discount Cover (NCD Cover) for you to add to your insurance (extra charge required). After purchasing NCD protection, even if you need to make a claim after an accident, you can still enjoy the original NCD. However, it is worth noting that this type of protection is capped. You can only use this coverage if the assessed claim amount does not exceed the cap. Also, NCD cover is not transferable to other insurance companies.

Although the car owner should notify the insurance company or intermediary and fill out the accident report within 24 hours of the traffic accident, it is up to the car owner to decide whether to claim compensation from the insurance company.

Some drivers will weigh the pros and cons of paying the fee privately or losing the NCD discount, depending on which option will incur less loss. This may be a better approach if your NCD is high, as you don’t want to be penny wise and pound foolish and lose out on a significant premium discount by paying to repair minor damage.

If the accident does not involve any casualties and is just a minor collision, you may consider settling the matter privately with the other party and signing a Traffic Accident Settlement Agreement.

However, if human lives are lost or injured, we do not recommend that the driver settle the matter privately, because even if both parties have signed a traffic accident settlement agreement, the other party may suddenly change their mind and demand a huge amount of compensation from you.