Discounts in Insurance Contracts

These are the privileges you enjoy having insured with a particular insurance company for several years. When you induced these mechanisms, you can cut-down your auto-insurance premium by more than 75%.

No Claim Discount (NCD)

No claim discount is the benefit you enjoy as a result of accident-free years of driving/insurance. It is a universal practice, and the percentage (ranging from 20 – 60%) is based on the number of years without accident. Kindly be guided, this is a typical example of what operates in a particular country, there may be variations as to its applicability in the various countries and the insurance companies involved. And here is the categorization of the no claim discount. After year percentage discount:

  1. 20%
  2. 25%
  3. 33.33%
  4. 40%
  5. 50%
  6. 60%

Based on the above NCD percentages, you can see that the discount increase as the year increases, although NCD is personal and applicable to each vehicle. In order to reduce your premium payable, it a global underwriting practice to allow the transferability of NCD from one vehicle to another. Now, let assume that you have been insuring one or more cars with an insurer for years, and one of those cars has attained an NCD of 60%. The first option is that if you purchased a new vehicle of high value, you could expressly instruct the underwriter to transfer the NCD of 60% from your oldest vehicle to the newly purchased car. Therefore, you will be able to secure a 60% discount off the premium of the new vehicle.

The second option, possibly you have not purchased a new vehicle, you can transfer the NCD from the vehicle having the highest NCD with the lowest value to another car of higher value, by so doing you will reduce your premium by 40 – 60%. Intrinsically, there is another dimension to the issue of NCD, which is the PROTECTED NO CLAIM DISCOUNT. Simply put, it means you have to pay a reasonable premium annually to protect your NCD. This is optional but advisable for a little extra buck (dollar). How it operates is premised on you having attained between 40 – 60% NCD, if you then involved in one or two accidents within the insurance period, your 40 – 60% NCD will be preserved and not be removed as a result of the accident.

Plurality or Fleet Discount

Plurality discount is a specified percentage (for example, 10% for private cars) off the premium payable when you insure more than one vehicle under a single auto insurance policy with an insurer. It is a universal norm for each vehicle under the policy to be entitled to the agreed percentage based on the insurance practice and relevant laws in your country.

Obviously, if you seek the opportunity of the 60% NCD and now 10% plurality discount on a single vehicle, which means you will be having 70% off the premium payable on that car. Wise strategy, isn’t it? Fleet discount, on the other hand, is applicable to companies or individuals having a fleet of vehicles. In order to qualify for fleet discount, you must insure ten (10) or more vehicles under the same policy. The percentage discount is negotiable based on the insurer, level of competition, market agreement, and relevant legislations of your country.

Risk Improvement Requirements

In auto-insurance, the underwriters made it compulsory and form part of the continuing warranties that is the installation of anti-theft devices like burglary alarm and demobilizing gadgets. The outcome of modern technology in this area is the auto tracking device. When you install the gadget in your vehicle, you can disable the engine anywhere and at any time if the vehicle is stolen.

Since you have eliminated the risk of theft, a reasonable insurance company will grant you a sizeable rebate off the premium. Nowadays, some insurers have taken the initiative of installing the auto-tracking device at their own expenses as a marketing factor while you will pay your premium in full.

Overnight Garaging

The insurance company usually compensate their clients if they have a specified garage or securely locked and manned place in which they parked their vehicles at night. In keeping the vehicle safe at night to avoid loss of accessories and/or vehicles, the insurers will allow a certain percentage off the premium due on that vehicle. The discount may vary depending on the insurer, but allowing 5% is not far from reality.

Senior Citizens

In fact, it is a common habit in most countries for individuals, corporate bodies and the government to give high honor to their senior citizens. Although the benchmark age may differ from one country to another, and be a senior citizen, you must have attained the age of 55 years and above. Now that you are retired, you need to check up with your insurers the discount due to retirees and seize that opportunity to lower your auto insurance premium by getting car insurance under $50 a month.

Laid-up Vehicles

There is the possibility of you traveling for months for the purpose of holidays, businesses, and other trips. The wise thing to do is to lay up your vehicle(s) for that idle period and expressly inform your underwriter of the proposed unused period.

The term laid-up means you simply put the vehicle in suspension, and the tires will be off the ground for the period of your traveling. When you return from your journey, you must notify the insurer, and the insurance company will calculate the premium for that period based on their laid-up rate and make a refund by raising credit notes and put on record if you pay the annual premium upfront. By so doing, you will be able to cut sizable amount off the premium paid/payable.

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