Car Insurance: What is NCD?

Car insurance is mandatory in Malaysia. A lot of factors are considered while calculating premium for a car insurance policy. Some factors are your car specifications, price and your driving history. An important factor is NCD or No Claims Discount. NCD is quite beneficial as it can reduce the premium you need to pay for your car insurance. Read on to know more about No Claim Discount and how it affects your premium.

What is NCD

NCD is a discount given when you have not made any insurance claims in the previous 12 months on your car insurance policy. You will get the NCD on your next policy renewal cycle.

How Does NCD Work

If you complete one year without any claim, you are entitled to one-year NCD on your renewal. As you complete each consecutive year without any claim, you will earn additional NCD every year. The discount varies for each additional year.

If you are buying an insurance policy for the first time, you are not entitled for any NCD though there are no prior claims under your name. NCD is applicable only when you complete at least one year of car insurance without any claim.

If you make a claim on your policy after going claim-free for some time, you would lose your NCD, and you need to start fresh to accumulate NCD.

Rate of Discount

The following table will explain the varying rate of NCD offered by car insurers in Malaysia.

Period of Insurance Private Vehicle Commercial Vehicle Motorcycle
1st Year 0% 0% 0%
2nd Year 25% 15% 15%
3rd Year 30% 20% 20%
4th Year 38.3% 25% 25%
5th Year and above 45% 25% 25%
  55% 25% 25%

Keep in Mind:

  • You will not lose your NCD if a claim made against your policy is settled as not your fault.
  • You can transfer your NCD to another vehicle. It is recommended to transfer your NCD to an expensive vehicle if you have multiple vehicles to save more money on payable premium.
  • Opt for windscreen cover as any claims made for windscreen would be covered under that rider, and would not affect your NCD.
  • Make a claim after estimating the cost for the claim. If the repairs cost less, it is better for you pay for it rather than make a claim and lose your NCD.

As NCD does affect your premium largely, it is beneficial to accumulate your NCD. NCD works in your favour as you would be considered as a low-risk driver, and you get to pay a lesser premium. Get a quote to see the difference NCD makes on your premium before you apply or renew a car insurance policy.

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