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In search of ...

Published:Sunday | March 14, 2010 | 12:00 AM

Cedric Stephens, Contributor

  • In search of ...

Question: My first insurance claim, a total loss, is now being processed by my insurer. The car was destroyed by fire. It was comprehensively insured for $500,000. When the fire occurred, I was earning 60 per cent no-claims discount. Will I lose the entire discount as result of the claim? Is this the usual practice in the industry?

- powellx2006@yahoo.com

Answer: I wish that I could answer your second question with a simple yes or no. I do not represent or speak for insurers. Were I to reply in the affirmative, members of this group could always refute what I wrote about their practices in relation to no-claims discounts. If I were to say that I do not know the answer, readers could question my competence. I am imprisoned by my own advice: do your homework!

Lack of information is the limiting factor. If I had specimen copies of the contracts of the 11 insurers who are licensed to transact motor insurance, I could give you a positive answer.

Here is what the no-claims Discount (NCD) clause of a leading insurer - not yours - says: "If no claim has been made under this policy during the following periods of insurance, the next renewal premium will be reduced by the discount shown in the following scale:

Period of

insurance DiscountPreceding year20%Preceding two consecutive years30%Preceding three consecutive years40%Preceding four consecutive years50%Preceding five or more consecutive years60%

"Should we consent to a transfer of interest in the policy, the period during which the interest was in the transferor shall not accrue to the benefit of the transferor. If more than one motor car is insured, the no-claims discount shall be applied as if a separate policy had been issued to each such motor car."

Most local motor insurers practice zero tolerance when it comes to NCD. Once you make a claim, you lose the discount. A few are more generous. Claimants lose part of the discount, depending on the size of the claim, when a claim has been paid. As you may have seen on cable, one US insurer calls this "accident forgiveness".

  • What type of car insurance to buy

Question: I am a 24-year-old inventory analyst. I obtained a driver's licence in November last year. Can you tell me about the differences between comprehensive and third-party insurance? I am unsure which one to go for and what I could afford. At most, the vehicle would cost no more than $1.2 million. It would be four to five years old.

- houslin_335@hotmail.com

Answer: I edited your email to omit the other details you provided. This is because I only provide advice on insurance. My knowledge about cars is very limited. I am not in the business of making recommendations about automobiles or where you can get a good deal.

I did a quick Google search and found an article that was published in this newspaper on January 20, 2008, 'Use your head, heart and wallet when buying a car'. You may find it to be of interest. The use of this search engine reinforced my decision to stick to what