Hedging against risks

We all want lower insurance premiums. Since insurance premiums usually come in the 4 digits range, any discounts on that is great. So, of course, the main issue here, will be to protect your discounts.


NCD, otherwise known as No Claim Discount, is the insurance company's way of rewarding you for not making a claim for a certain period of time. If you do not make a claim for, say example, 2 years. Your discount may go up to 20%, the maximum most firms offer is up till 50%. Therefore you can see why, most will try to protect this fervently.

Where do 1 day car insurance come in?

Insurance is all about risk management. How do you hedge against the risks of losing your NCD?

Well, if there was a way to contain the risks against your NCD and insure against it, that would be the best option. Of course, the other option would be to refrain from all risks - and then, you might as never hit the road.

So, 1 day car insurance serves as this 'containment'. You isolate high risks driving activities such driving a relatively unknown vehicle or travelling in unfamiliar territories and insure them under a separate policy so that they will not affect your current policy and therefore keeping your NCD save even in mishaps.

How does this all make sense?

So why would the insurer let that happen? Well, here's the thing. By doing this, it is really the responsible way of managing your risks. You save your insurer heck load of money by not having to pay out your claim. And on the other hand, you are paying for a much higher daily premium on the one day coverage, so the payout claim is somewhat justified.

Insurance companies like responsible people, socially responsible people that do not impose risks on them. Increase signs of responsibility makes them perceive you as a better driver. Lower premiums will follow suit after.