The cost of owning a car in Malaysia is not only paying off monthly instalments and maintenance but also paying for yearly insurance. It is easy to see how the cost can quickly mount up depending on the type of car you own and the type of coverage you choose. Fortunately, your No-Claim Discount (NCD) can help you save money on your motor insurance premiums.

  

Those who have renewed their motor insurance before would not need an introduction to NCD. It is sometimes referred to as the No-Claim Bonus.

  

What is NCD, and how does it save me money on my motor insurance?

NCD is essentially a reward scheme to encourage insured drivers to drive safely. This is a discount offered by insurers if you (the insured) have not made any claims against your vehicle insurance policy in the past year. You can accumulate up to 55% of this discount over time.

  

By encouraging safe driving, the NCD indirectly helps to reduce the number of road accidents. When you renew your motor insurance every year, you can pay a lower premium if you do not file a claim as a reward for good driving habits.

  

How is my NCD rate calculated?

Persatuan Insurans Am Malaysia (PIAM) sets the No-Claim Discount rate, which every motor insurance company in Malaysia follows. On motor insurance, the maximum discount is 55% for cars and 25% for motorcycles.

  

NCD rates for private cars, motorcycles, and commercial vehicles are as follows:

No-Claim Period	Private Car	Motorcycle	Commercial Vehicle
1st year	0%	0%	0%
2nd year	25%	15%	15%
3rd year	30%	20%	20%
4th year	38.33%	25%	25%
5th year	45%	25%	25%
6th year onwards	55%	25%	25%

  

Whenever you renew your private car insurance in the second year, you're eligible for a 25% discount on your basic premium because your NCD will start accumulating after your first year of insurance.

  

After five years of not making claims against your car insurance policy, you'll reach the maximum rate of 55%. As a result, starting from the sixth year of renewal, you can enjoy a 55% discount on your private car insurance basic premium. This discount is applicable for the rest of your life, as long as there are no own damage or third party claims made against your policy.

  

Below is an example of how much you can save if your NCD reaches the maximum amount:

Let's assume your Perodua Myvi's basic insurance premium is RM1,327.95 this year. You've been a good driver for more than six years without an accident or a claim. You are entitled to a 55% NCD, which is deducted from your basic premium. In this case, you will only need to pay RM597.58 for your basic premium, not including any add-on coverage, service tax, or stamp duty, saving you RM730.37 in total.

  

How do I protect my NCD?

In Malaysia, all drivers must be insured with motor insurance, and NCD is an excellent way to encourage them to keep the roads safe while also saving them money on their insurance policies. It also promotes wise insurance policy use since once you or another party makes a claim, you could lose it, particularly if you're at fault. You'll then have to start from scratch because your NCD will be reset to zero.

  

Before you make a claim, you should consider whether it is worth losing your NCD, especially if the claim amount is not very high. One way to protect your NCD is to pay for the damages yourself if you can afford it.

  

You can also add a windscreen insurance add-on to your insurance policy to avoid losing your NCD. With this add-on, you can still claim from your insurer if you need to replace your windscreen, but this will not affect your NCD. You can still file a claim if your windscreen is damaged without this add-on, but your NCD will be lost.

  

What happens to my NCD if I am involved in a road accident?

An accident will not automatically reset your NCD. It depends on who is at fault and how the accident is settled.

  

These are some of the different scenarios:

  

1. The accident was not your fault, and your car is damaged

You could file a No Fault Own Damage claim with your motor insurer if you weren't at fault. You will receive compensation for your damages, and you won't lose your NCD. You can also file a Third Party Property Damage (TPPD) claim with the responsible party's insurer, but the process will be longer.

  

2. You're the guilty party

If you caused the accident but don't want to lose your NCD, you can consider paying for the damages out of your pocket. The damage incurred may be smaller than what can be saved by your current NCD, so many drivers opt to settle privately.

  

It will affect your NCD if you make an Own Damage Claim or if the other party files a claim.

  

3. You suffered from a hit-and-run

If you got the other vehicle's registration number, you need to file a police report and provide any other evidence. Police will be able to determine who is at fault if they have witness statements or dashcam footage.

  

If the police confirm that you are innocent, you can file an No Fault Own Damage claim, and your NCD will not be affected.

  

However, if you cannot get the other vehicle's registration number, you will have to pay the damages. If you decide to file an Own Damage Claim with your insurer, you will lose your NCD.

  

Where can I check my current NCD?

You can check your NCD rate online instantly. If you are a Kurnia customer, click here. To check your current NCD rate, all you need is your NRIC number and vehicle registration number. Ensure that your NRIC number and vehicle registration number are the same as your Road Transport Department's records.

  

You can contact your current insurer for more information if you think the NCD rate shown is incorrect.

  

Can I transfer my NCD?

Your NCD is linked to your NRIC. So, even if you switch insurance companies or change cars, your NCD stays the same. Since it follows your NRIC, you cannot transfer it to anyone else, not even to your family members.

  

If you have more than one car, you might want to transfer the NCD to the car with the highest insurance premium in order to enjoy the discount and save more money fully. Even though your old car will have 0% NCD, it usually has a lower premium, plus you can start accumulating NCD again the following year.

  

What other information you should know about NCD

  

It is my first time buying a car. Do I have an NCD?

No, all first-time car buyers are not eligible for NCDs. The NCD rate remains at 0% and will begin to accumulate from the second year until you reach the maximum of 55%, provided no claims are filed against your policy.

  

Will my NCD be affected if I get into a minor accident and pay for damages myself?

No, since no claim is made against your insurance policy.

  

Can I transfer my NCD from my motorcycle to my car?

No, you cannot transfer NCD from one type of vehicle class to another type.

  

How do I transfer my NCD to another car or when I switch to another insurer?

If you want to transfer your NCD to another car, you can request your insurer to do it for you. Depending on your insurer, you may need to pay the prorated NCD withdrawal premium for the old car before the transfer can be completed. It is recommended that you keep a copy of the most recent cover note just in case proof of the most recent NCD rate is needed by the insurance company. The process may differ from insurer to insurer.

  

In case you decide to change insurers, there is no special process. All you have to do is choose your preferred insurer and purchase your policy. When you request a quote, your NCD will be automatically shown.

  

How many years does my NCD last? / Does my NCD have an expiry date?

Whether you renew your motor insurance will determine the expiration date of your NCD. Assuming that you have an NCD entitlement of 55% but decide not to renew it next year since you won't use the car at all, then in the second year, your NCD will be 45%.

  

Suppose you do not renew your car insurance in the following years, your NCD entitlement will continue to decrease according to the table above until it reaches 0%, which will take approximately five years.

  

  

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Disclaimer: This blog post is strictly for informational purposes, and should not be taken as advice of any kind. Kurnia disclaims all responsibility for any losses resulting from reliance on the information contained in this article.