What is My NCD Rate? Everything You Need to Know about No-Claim Discount in Malaysia

What is My NCD Rate? Everything You Need to Know about No-Claim Discount in Malaysia

 

When you purchase your car insurance, the main reason is to stay protected in case something happens on the road. If you are met with an unfortunate incident, you can choose to pay for the damages yourself or make a claim.

But what happens when you have not submitted any claims for an entire year? That’s where your No-Claim Discount (NCD) rate will kick in and reward you for your spotless record.

 

So, what is an NCD rate?

No-Claim Discount or better known as NCD is a reward for safe driving. It is a discount given to car owners who have not made any claims within a year or more upon renewal of their motor or car insurance.

The NCD discount rate is based on a fixed rate set by Persatuan Insurans Am Malaysia (PIAM) Motor Tariff and it goes higher the longer the car owner doesn’t make any claims up to a maximum of 55% after five years.

The table below shows the NCD rates for private cars and commercial vehicles:

Period of Insurance

Private Car

Commercial Vehicle

After 1st year

25%

15%

After 2nd year

30%

20%

After 3rd year

38.33%

25%

After 4th year

45%

25%

After 5th year

55%

25%

6th year onwards

55%

25%

Why is NCD Important?

A No-Claim Discount is a great reward to reap for safe driving. If you have not utilised the NCD, here are reasons why you should:

- Provides greater savings. Motor insurance is mandatory in Malaysia and can be costly when taken into account with the required road tax component as well. The Ringgits you save can go a long way. Making an effort to drive safely can cut the cost of your car insurance by as much as 55%!

- Encourages wiser usage of insurance. While an NCD helps save on premium cost, it also encourages car owners to be more car insurance-savvy. Since there are circumstances where you can lose your NCD, this can help car owners to consider in length before making claims.

For instance, if you get involved in an accident where it isn’t your fault, you can choose to make a third party insurance claim. This way, you will not lose your No-Claim Discount as you are not filing against your own policy.

Furthermore, if you were at fault in an accident where the total repair cost incurred was lower than the current discount you enjoy on your NCD, it is wiser not to make a claim against your own insurance and pay for the repairs out of your own pocket to avoid affecting your NCD the following year.

If your NCD starts from zero again, it might be a good reason to compare car insurance quotes come renewal time. Find the balance between the features you need and the right price before you commit to a car insurance provider for the coming 12 months. 

 

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What happens if you make a claim?

Accidents happen, so when you make a claim, the NCD entitlement that you accumulated will go back to zero. The next time you renew your policy, you will pay for your premium in full, and you will only receive the NCD the year after.

For instance, let’s say you were involved in an accident during your second year of insurance period in which you need to file a claim. Currently, you have a 25% discount on your NCD entitlement, but since you filed a claim, the next time you renew your policy, you will not be entitled to a discount as your NCD rate would go from 25% to 0%.

 

| See also: How to Increase the Resale Value of your Car |

 

Under which situations will I be able to retain my NCD rate?

If you fear losing your NCD after years of accumulating a discount entitlement, rest assured that the following two scenarios will not affect your NCD:

- No-Fault Damage. If you made a claim and the accident is not your fault, you will not lose your NCD. For example, you were involved in an accident in which your car was rear-ended by another vehicle and the police decided that it’s not your fault, your NCD will not be affected. You can still make a claim with your policy without losing your NCD entitlement or make a claim with the involved party’s insurance.

- Windscreen Coverage. If you have a windscreen cover as an add-on to your motor insurance policy, your windscreen coverage will pay for any repair or replacement without affecting your NCD. You will however, lose your NCD if you make a claim without a windscreen coverage add-on.

 

What happens if I have a new car?

A No-Claim Discount can be transferred to another car as the NCD applies to you, and not to the vehicle. The NCD rate is attached to your name, so even if you sell your car and get a new one, you can easily transfer your NCD. Keep in mind that you cannot transfer your NCD to another person.

If you have more than one car, you cannot apply the same No-claim discount on more than one car. If you have accumulated a 38.33% NCD on your first car and you just recently bought a second car, you cannot use the NCD at the same time. You will have to start from scratch and earn the NCD for each vehicle individually.

What about when I change my policy?

When you decide to change a policy with a new insurer, you can still retain your NCD since it is something that is regulated and not set by the insurance company. So, whether you switch to a new policy or a new insurer, the discount you accumulated on your NCD will remain the same.

Where can I check my NCD rate?

When you renew your car insurance from your existing insurer, your NCD entitlement is mentioned. If you don’t know your No-Claims Discount details, you can do so by checking your NCD rate entitlement. All you have to do is provide your vehicle registration number and your ID number.

It’s important to note that if your NCD entitlement has been withdrawn or cancelled by the car insurer/takaful operator, you will have to refer to your insurer or takaful operator for the NCD details.

Tips to remember for your No-Claim Discount

Having a No-Claim Discount is a cost-effective way to save on premiums over time. So keep these useful tips in mind!

1. It keeps increasing with every passing year you don’t claim! You can save as much as 55% on your premium if you don’t make a claim for more than five years. If the gross premium by the insurer totals RM2,000, that means the savings from NCD will come up to RM1,100. Your gross total payable would be only RM900!

2. It’s possible to transfer your NCD rate. You can transfer your NCD entitlement to another car. However, you cannot transfer the NCD to a different owner.

3. You can retain your No-Claim Discount. You can keep your NCD entitlement even if you change policy or insurer; your NCD remains unchanged in this scenario.

4. There are ways to avoid losing No-Claim Discount. You can avoid losing your NCD entitlement if it’s not your fault by making a third-party insurance claim or utilising your windshield coverage (for windshield repair or replacement). Always work out the potential costs of repairs involved!

5. First time car owners do not have NCD. You do not earn NCD on a newly purchased vehicle if you bought a car for the first time. You will only earn your NCD after a year of not making any claims.


The No-Claim Discount is a great boon to all car owners. While some may be satisfied with just knowing that they have a discount for a year, understanding the ins and outs of the No-Claim Discount can help policyholders get the best out of the reward they are getting – especially knowing how much it costs to be a vehicle owner in Malaysia.

 

Be a savvy car owner! Start today and compare for the insurance you need. Get smart, compare first!

 

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