NCD Explained: Your Complete Guide

What is NCD (No Claim Discount)?

No Claim Discount (NCD) is a reward system used by car insurance companies in Malaysia to incentivize safe driving. Simply put, the longer you go without making a claim, the bigger discount you get on your premium.

NCD is also sometimes called No Claims Bonus (NCB). In Malaysia, it's regulated by Bank Negara Malaysia (BNM), which sets the standard discount rates that all insurers must follow.

How NCD is Calculated

Your NCD discount is applied to your base premium (before add-ons and service tax). Here's how it works:

What Happens When You Make a Claim

When you make a claim, your NCD is affected based on how many claims you've made:

• First claim: NCD drops by 2 levels (e.g., 55% drops to 38.33%)
• Second claim in same year: NCD drops to 0%
• After NCD resets: You start building it up again from 0%

Types of Claims That Affect NCD

Claims That Reduce NCD:

• Own damage claims (accidents)
• Theft claims
• Fire damage claims
• Third party claims where you're at fault

Claims That Usually Don't Affect NCD:

• Windscreen claims (if covered separately)
• Third party claims where you're not at fault (knock-for-knock)
• Some special perils claims (depends on policy)

How to Protect Your NCD

1. NCD Protection Add-on

Some insurers offer NCD protection as an add-on. This allows you to make one claim per year without losing your NCD. Consider this if:

• You have high NCD (45% or 55%)
• The cost of the add-on is reasonable compared to potential NCD loss
• You drive frequently and want peace of mind

2. Consider Small Claims Carefully

Before making a claim, calculate whether it's worth it:

• Compare the repair cost to your excess (deductible)
• Calculate how much your NCD is worth over the next few years
• For minor damage, paying out of pocket may be cheaper long-term

3. Separate Windscreen Coverage

Add windscreen coverage as a separate add-on. This way, if you need to replace a cracked windscreen, it won't affect your NCD.

Transferring Your NCD

When Buying a New Car

Your NCD is tied to you, not your car. To transfer:

1. Request an NCD confirmation letter from your current insurer
2. Provide this letter to your new insurer
3. Your NCD will be applied to your new policy

When Switching Insurers

You can take your NCD to any insurer. Simply:

1. Wait until your current policy expires (don't cancel early)
2. Request NCD confirmation from your current insurer
3. Apply with your new insurer with the NCD letter

NCD Validity Period

Your NCD is valid for 12 months after your policy expires. If you don't insure a vehicle within this period, you'll lose your NCD and have to start from 0%.

NCD for Multiple Cars

You can only use your NCD for one vehicle at a time. If you own multiple cars, each car needs its own NCD history. However, some insurers offer multi-car discounts as a separate benefit.

Tips to Maximize Your NCD Savings

1. Drive safely - The best way to maintain your NCD is to avoid accidents
2. Pay for small repairs yourself - Don't claim for minor damage
3. Get windscreen coverage - Protect your NCD from chip claims
4. Consider NCD protection - Especially if you have 55% NCD
5. Don't let your policy lapse - Renew before expiry to maintain NCD
6. Compare insurers - Your NCD is portable, so shop around