No Claim Discount, also commonly referred to as NCD, is a vital part of your car Insurance. The amount of your insurance premium payable or saving is dependent on your NCD entitlement. As the name suggests, this no claim discount is extended to you when you do not make any claim toward your insurance during the in force period. Thus, when you renew your insurance for the next 12 month period, you are entitled to this no claim discount (NCD).
The NCD is tied to your name and not a car. Thus, it is actually transferable. Meaning that if you sell off your car and get yourself a new car, your new car insurance can be applied to your entitled NCD. In the event that you are selling off your old car, remember to cancel that policy as any remaining period covered not used can be refunded to you.
Although the name is called No Claim Discount, it does not means you cannot claim against your own insurance. In the event of an accident, which you are not at fault, you are entitled to claim your own insurance for repair and yet you do not lose your NCD. Your NCD will only be lost if you are involved in an accident and you are at fault, resulting in other parties claiming against you.
Once your insurance has been claimed, you lose your NCD entitlement and it is reverted to zero (0%) – no discount.
How much can you save?
But if you have not been involved in an accident, your NCD entitlement will increase over the years. The maximum NCD one can entitle to is 55%. While you can accumulate your NCD over the years, you may also lose your NCD if you do not own or insured your vehicle over the years.
Below is the similar illustration of your NCD entitlement over the years for private vehicles:
- First Year – 0%
- Second Year – 25%
- Third Year – 30%
- Forth Year – 38.33%
- Fifth Year – 45%
- Onward – 55%
As for motorcycle and commercially registered vehicles, the NCD rate will be much lower and cap at the max of 25%.
- First Year – 0%
- Second Year – 15%
- Third Year – 20%
- Forth Year – 25%
- Onward – 25%
How to check your current NCD entitlement?
If you are not sure of your NCD entitlement, you can actually check it online via this link.
If you have renewed your insurance policy without taking into your NCD entitlement, inform your agent and they will help you to apply your NCD and have the excess payment refund to you.
Some important factors to note regarding NCD
You will not lose your NCD if claims were made against your policy for an accident that was not your fault. For instance, you are involved in an accident which you are not at fault. You can either claim against the other party’s Third Party Policy or against your own Comprehensive Policy for faster claim process and suffer no loss in NCD.
NCD is Transferable
NCD is in fact applied to the policy holder and not to the car insured. Therefore if you have an NCD of 30% and you decided to sell your existing car and purchase a new one, you still retain your NCD (of 30%) which can be transferred to the new car.
However, if you are purchasing a new car, and keeping the existing one, then the new car’s NCD would start with 0% as you are not able to apply the same NCD on both cars. We do advise that if you have more than one car, you should transfer the higher NCD to the more expensive (higher market value) car to gain more savings on premium.
Changing of Insurer
In the event you decide to renew your motor insurance policy with a new insurer, your NCD should apply to the new policy provided by this new insurer. NCD is something that is regulated and not set by the insurance company and therefore, it is applicable no matter which insurance company you purchase your motor insurance policy from.
Windscreen policy is an add-on cover to your motor policy. Many people opt to purchase this considering how expensive it is to have a windscreen replaced. If you have windscreen insurance, then the insurance company will pay for any repair or replacement without you losing your NCD. However, if you do not have windscreen insurance and you claim, then you will lose your NCD. Here it makes sense to check what is better for you. A qualified insurance agent can help you with that decision. We will explain further with examples below.
How to take advantage of NCD?
Sometimes it is worth paying for the repair cost instead of making a claim against your policy. Doing so will help you retain your NCD. This applies when the repair cost is small and when the savings on your premium cost from your NCD is greater than the repair cost itself. Therefore, it is good to be aware of how much premium you are paying. As well as how much savings in terms of NCD you are getting to allow you to make a better decision. Here are some examples:
If you do not have windscreen cover/insurance
Example: The repair cost of your windscreen is RM 500. You have 55% NCD that saves you RM600.
Solution: You should not claim against your insurance company, but pay the windscreen repair yourself. When you renew your insurance, you will have saved RM 100. But that isn’t all. You get further savings the following year (if there had not been any claim) since your NCD is retained.
But what if the repair cost is the same as the savings from NCD for that year? We would still suggest that you pay for the repair yourself. Since the savings you will get from NCD is more valuable.
If you have windscreen cover/insurance
No effect on your NCD. So just inform your insurer and go ahead and repair your windscreen!
Be a smart consumer. Understand your policies well. This can protect your rights as a policy holder, as well as save you money and unnecessary cost. Always have your insurer’s care line stored in your phone. Make use of this service in case you have any doubt or inquiry regarding your policy. Insurance can be complicated and good advice is hard to come by.