Can someone explain NCD please.

Logmar

I currently have 15 years NCD on our current family car. 
I am looking at buying a second car for which I've just looked into insurance.
When it came to getting my quote it says "Your NCD can’t be used for more than one policy at a time", so for this second car does that mean i'll have to put in zero years NCD? If so, why is this?

Nobbie1967

Yes, it’s just the way the motor insurers have agreed to operate the scheme and recognise each others NCB. In reality there probably won’t be a huge difference in price even if you swapped the 15 years over to the new car. I have 15 years on one car and two on the other. I tried switching them over on quotes and it made virtually no difference.

400ixl

Correct, NCD is applied to the policy not the person. You have to build the NCD per policy, starting at 0 for the second car. Probably won't make that much of a difference unless you are a high risk.

Flugelhorn

I have had this a couple of times when insuring cars for the offspring to learn on  - they asked if I had NCD elsewhere and while I couldn't apply it to the second car, the quotes were less than my main car 

DullGreyGuy

Logmar said:

I currently have 15 years NCD on our current family car. 
I am looking at buying a second car for which I've just looked into insurance.
When it came to getting my quote it says "Your NCD can’t be used for more than one policy at a time", so for this second car does that mean i'll have to put in zero years NCD? If so, why is this?

NCD was created by the marketing department, hence it makes no sense. 

Take home insurance 15 years ago, they asked you two questions:

How long have you held home insurance for?
How many claims have you had in the last 5 years?

These are sensible questions and you can do risk assessment based on them.

Now think NCD, and NCD Protection too, You could have claims ever other year and still claim to have 10 years NCD. Most insurers, until recently, have 60%-70% maximum NCD. It used to be everyone gave maximum NCD at 5 years. Some marketing people then thought wouldn't it be great if we say we recognise up to 9 years NCD? They just kept quiet that at 9 years NCD was actually a lower discount than others gave at 5 years. 

In more recent years some insurers have decided its a bit stupid to have over 80% of your customers allegedly getting a 65% discount, starts sounding like a furniture shop with a sale 364 days of the year. 


Motor insurance has broadly aligned on a set of rules for NCD, though occasionally someone comes up with a new idea like Named Driver NCD which was designed to create stickiness as only your current insurer would recognise it. Unfortunate Home now seems to be thinking this NCD and NCDP thing is a good idea too and more insurers are now stating they offer one but the rules are more diverse and of cause you could be paying 5-10% for NCDP and your next insurer not have any concept of NCD. 

You need to consider NCD as an object, it cannot be divided, combined or replicated. It can sit on one policy at a time and dies if not on a policy for 2 years (3 with Admiral). These days though many insurers have reduced the discount and secondly most give a "introductory" NCD for those that are a good risk but have no NCD to use. 

Not looked personally recently but one member here did A/B testing and realised adding their second car with 0 NCD or with 15 years NCD made approximately £5 a year difference. 

WellKnownSid

I had a quote with 20+ years ncd which was £143.38. As it was for an additional car I realised my mistake so I edited it to 0 years ncd - it went up to £148.96.

Your mileage may vary…

Aretnap

Logmar said:

I currently have 15 years NCD on our current family car. 
I am looking at buying a second car for which I've just looked into insurance.
When it came to getting my quote it says "Your NCD can’t be used for more than one policy at a time", so for this second car does that mean i'll have to put in zero years NCD? If so, why is this?

NCD is a marketing gimmick - nothing more, nothing less. 

In days of yore it was a form of loyalty bonus. A way of enticing your customers, particularly the good ones who didn't make claims, to renew, and the idea was that you would only get it if you stayed with the same insurer year after year. 

That didn't last long though. Soon enough insurers realised that if they wanted to attract new customers they would have to offer to match the no claims discounts that their rivals were offering their customers. So it became de facto transferable. A bit like how Tesco might offer to accept Sainsbury's money-off vouchers - not because they're under any moral or legal obligation to accept them, but just because they think it's a good way of poaching Sainsbury's customers. 

However if you aren't renewing a policy (for example because you're insuring a second car for the first time, or because you've been driving a company car for a few years) you won't have a current insurer who is offering you a no claims discount on your renewal - so there's no incentive for a new insurer to offer you a no chains discount either.

In short, asking why you can't use your NCD on two policies at a time is a bit like getting one of those "£10 off your next shop" vouchers from Tesco, then asking why you can't use it twice at two different supermarkets. Because... well, of course you can't.

That's the theory at any rate. In practice of course NCD had been rather uncomfortably forced into the general risk-based pricing structure that insurers use, so if you look around hard enough you might find an insurer willing to mirror your NCD on a second car. Or you might find that when you tick the boxes to say that your own another car and haven't had any claims for 5 years the insurer just gives you a quote equivalent to what you'd expect with a reasonable amount of NCD anyway. Truth is NCD has become a bit of a phantom - something like 80+% of people have full NCD depending on how "full" is defined, so in reality the price with NCD is just the standard price - like those "70% OFF" jackets at Mountain Warehouse which are never, ever sold at "full price".

Really NCD is a stupid system and it would probably be best all round if insurers just scrapped it outright. However too many people have come to think of their NCD but as a marketing gimmick but as (a) a human right and (b) the most valuable thing that they will ever own (you can even get insurance for it!), so the first insurer to scrap it altogether would immediately lose all their business. There's probably a case study there for an economics class in how markets can entrench suboptimal outcomes. It would make a change from the one about the QWERTY keyboard.

Goudy

Aretnap said:

Logmar said:

I currently have 15 years NCD on our current family car. 
I am looking at buying a second car for which I've just looked into insurance.
When it came to getting my quote it says "Your NCD can’t be used for more than one policy at a time", so for this second car does that mean i'll have to put in zero years NCD? If so, why is this?

 Truth is NCD has become a bit of a phantom - something like 80+% of people have full NCD depending on how "full" is defined, so in reality the price with NCD is just the standard price - like those "70% OFF" jackets at Mountain Warehouse which are never, ever sold at "full price".

Yes.
Put simply you have the cost of the policy minus whatever discount you've "earned".

As a simple example, a £300 policy with a 10% discount means you pay £270.

Next year your discount could go up to 15% as you haven't claimed, but your policy has also gone up to £350.
This means you pay £297.50.

Some people will scratch their head and wonder why their insurance has gone up when they've actually "earned" more discount.
The underlaying policy price has increased effectively wiping out the discount and more compared to last year, even though the discount has increased.