What you need to know about No claim discount (Declaration) - Part 4

You probably have not noticed before on the top most portion of your motor proposal form a statement that reads:

"Statement Pursuant to Section25(5) of Insurance Act, CAP.142 (Or any subsequent amendments thereof) You must disclose all facts as you know or ought to know which may affect the insurance cover being applied for. Otherwise, the insurance policy issued may not be valid"

I can't emphasise more on this especially to car owners who intend to change car. I have seen enough of car owners declaring haphazardly their NCD level only to get themselves into unnecessary troubles.

Look, if the insurer collects $1000 premium from you based on the declared NCD and found that the NCD should be lower or nil, it is only right and natural that they collect the difference from you. If they are unable to do so, they may shorten your policy to cover the difference.

It makes thing worse when you realised only after an accident that your policy has lapsed as the policy has been shortened. In fact, if you read that statement again, it is stated clearly that the insurance policy may not be valid!

Is it too strict or unreasonable of the insurer?

One has to realise that the insurer depends a lot on the insured's declaration on material facts in order to underwrite on the risk and to provide a fair premium. Without the actual facts, the insurer may not be collecting the required premium and right terms and conditions. Thus, it is the duty of the insured to declare all material facts that he knows or ought to know as this forms the basis of the contract between both parties.

This is Utmost Good Faith in its essence.


So, if you intend to change car, help yourself by checking with your existing insurer on your current NCD on policy before you pen it down on the proposal form next time. Do not leave it to chance!