No-Claim Discount (NCD) refers to a discount on car insurance premiums awarded to policyholders who do not file any claims during their policy period. In Malaysia, NCD rates range from 0% to 55% for private cars, depending on the number of claim-free years. The discount directly reduces the insurance premium, encouraging safe driving and rewarding claim-free records.
The General Insurance Association of Malaysia (PIAM) standardizes NCD rates, ensuring consistency across insurers. For example, a policyholder with five consecutive claim-free years receives a 55% discount on their premium. If the base premium is RM2,000, the post-NCD payment drops to RM900, saving RM1,100 annually.
What is NCD (No-Claim Discount) in Malaysia
How Is NCD Calculated for Car Insurance in Malaysia?
NCD accumulates annually based on claim-free years, with fixed percentages set by PIAM. The discount structure for private cars is as follows
- First year 0% (no discount for new policyholders).
- After 1 claim-free year 25%.
- After 2 claim-free years 30%.
- After 3 claim-free years 38.33%.
- After 4 claim-free years 45%.
- After 5+ claim-free years 55% (maximum discount).
For motorcycles, the maximum NCD is 25%, while commercial vehicles cap at 25%. The discount applies at renewal, provided no claims were made in the preceding policy year.
How Does NCD Affect Your Insurance Premium?
NCD lowers the payable premium by deducting a percentage from the base rate. For instance, a driver with a 55% NCD and a RM1,500 base premium pays only RM675, saving RM825. Insurers like Allianz and Etiqa automatically apply NCD during renewal if the policyholder meets the claim-free criteria.
Claims reset the NCD to 0%, increasing future premiums. A single claim after five claim-free years reverts the discount to 0%, requiring another five years to regain the 55% rate.
Can You Transfer NCD to Another Vehicle in Malaysia?
NCD is tied to the policyholder, not the vehicle, allowing transfers to a new car. To transfer NCD, submit proof of the existing NCD rate (e.g., a previous cover note) to the new insurer. The process is instant for policies under the same name.
If a policyholder sells their car and does not purchase a new one within 12 months, the NCD expires. For example, a 55% NCD unused for over a year drops to 45% upon reinstatement.
What Happens to NCD After an Accident or Claim?
Filing an Own Damage claim resets NCD to 0%, while No-Fault claims preserve it. If another driver is at fault, policyholders can file a Knock-for-Knock (ODKFK) claim with a police report to avoid losing NCD.
Windscreen claims impact NCD unless the policy includes a windscreen add-on. Without this add-on, a RM1,000 windscreen repair claim forfeits the NCD, costing more in long-term premium hikes than the repair itself.
How Can You Check Your NCD Status in Malaysia?
Policyholders verify NCD online via PIAM’s Central NCD Database or insurer portals. Platforms like MyCarInfo require the vehicle registration number and NRIC. The result displays the current NCD percentage, effective date, and next renewal rate.
For discrepancies, contact the insurer with supporting documents, such as past policy certificates.
Are There Exceptions Where NCD Is Not Affected by Claims?
Windscreen add-ons and No-Fault claims exempt policyholders from NCD penalties. Comprehensive policies with windscreen coverage allow separate claims without resetting NCD. Similarly, ODKFK claims for non-fault accidents retain the discount if supported by a police report.
Third-party claims (e.g., injuries or uninsured vehicles) void NCD protections. For example, a collision with an uninsured Grab car disqualifies ODKFK eligibility, forcing an Own Damage claim and NCD loss.
What Strategies Help Maximize NCD Benefits?
Prioritize minor repairs out-of-pocket and add windscreen coverage to protect NCD. Paying RM500 for bumper repairs privately preserves a 55% NCD, saving RM1,650 over three years compared to a claim-induced 0% reset.
Policyholders with multiple cars allocate NCD to the vehicle with the highest premium. Transferring a 55% NCD from an old Myvi (RM1,000 premium) to a new Mercedes (RM5,000 premium) cuts the latter’s cost to RM2,250, saving RM2,750 annually.
How Do Insurers in Malaysia Enforce NCD Rules?
PIAM mandates uniform NCD rules, but insurers may offer loyalty bonuses beyond 55%. Some providers, like Kurnia, provide additional discounts for long-term customers, though the base NCD remains capped at 55%.
Fraudulent claims (e.g., falsifying accident reports) lead to NCD forfeiture and legal penalties under Malaysia’s Insurance Act. Insurers cross-check claims with police reports and workshop invoices to verify legitimacy.
What Are Common Misconceptions About NCD?
NCD does not expire if the policy lapses for under 12 months, and it cannot be transferred to another person. A 55% NCD unused for 11 months remains intact, but exceeding 12 months reduces it to 45%.
Family members cannot share NCD. For instance, a father’s 55% NCD cannot apply to his son’s car unless the policy is under the father’s name.
How Does NCD Compare to Other Insurance Discounts?
NCD is distinct from renewal discounts or bundling offers, which provide separate savings. A 55% NCD combined with a 10% renewal discount compounds savings. For a RM2,000 premium, the NCD reduces it to RM900, and the renewal discount further lowers it to RM810.
Unlike NCD, loyalty programs (e.g., Allianz’s DriveXtra) reward points for safe driving but do not reduce the base premium.
What Legal Frameworks Govern NCD in Malaysia?
Bank Negara Malaysia and PIAM regulate NCD under the Motor Tariff guidelines. Insurers must adhere to standardized rates, and disputes are resolved through the Financial Mediation Bureau (FMB).
The Road Transport Act 1987 requires all vehicles to have valid insurance, making NCD a universal incentive for claim-free driving.