Most of us drive cars up and down the highways, to and fro work. Have you ever paused and
asked yourself, do I really know my car insurance well? Or has your parents always settled (ehem and paid) for your car insurance so you did not have to worry, or you just leave the nasty paperwork to your agents all these while (Hah!)? Have you ever asked – do I really know what’s going on so that when the unfortunate happens, I’d know how to go about it? We at PolicyStreet are here to help you understand some difficult jargons!
Through whatever ways you have been buying or renewing car insurance in the first place, you must have come across this term called No Claims Discount. What is No Claims Discount in the first place? Well you have come to the right place, where you can find out about 5 main things you need to know about No Claims Discount in car insurance, so that you become an ultimate car insurance pro!
Hey PolicyStreet, what is No Claims Discount?
No Claim Discount, commonly referred as NCD is an important aspect of your car insurance. The overall amount of car insurance premium you have to pay is largely dependent on your NCD entitlement.
As the name suggests, NCD is extended to you when you do not make any claim toward your car insurance during the period of being insured. Thus, when you renew your insurance every 12 months period of cover, you are entitled to NCD, and this stacks up over time.
This is a fixed rate determined by General Insurance Association of Malaysia (also known as PIAM) and therefore is the same across all insurance companies in Malaysia.
What are the various limits for No Claims Discount in a car insurance policy?
For cars, when you buy a new first, you start with 0% NCD. After a year of no claims, your NCD increases to 25% at the renewal of your policy, and this goes on and on, until you are able to accumulate to 55%.
First Year – 0%
Second Year – 25%
Third Year – 30%
Forth Year – 38.33%
Firth Year – 45%
Onward – 55%
I’m an avid car person so I change my car every year (Wah, good for you eh!). May I retain my NCD or do I have to keep accumulating my NCD from scratch?
We are so jealous that you get to change your car every year. Nevertheless, good news! – NCD is tied to your name and not a car. Thus, it is transferable and can be accumulated. Therefore, if you sell off your car and get yourself a new car, your new car insurance shall be applied with your entitled NCD that was accumulated when you had your previous car.
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 refund to you.
Also, NCD is transferable if you decide to switch to another car insurance company! NCD is not tied to specific car insurance company.
Does No Claim Discount mean I cannot claim against my own insurance?
Although the name is called No Claims Discount, it does not mean you cannot claimed 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 No Claims Discount. Another perspective to go about this is, when your car collides with another car, and the other driver is at fault, you may claim for the damages from YOUR own car insurance company, and your No Claims Discount will not be affected.
Just sharing with you a small secret, what is happening behind the scenes is that your own car insurance company first “prepaids” your claim. They will then claim the same amount directly from the opposing insurance company of the person at fault. This process happens without you getting involved, so hassle on your end!
Okay, so how can my NCD be affected or lost then?
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.
But if you have not been involved in any accident, your NCD entitlement will continue to increase over the years as per covered in point 2.
Is there any way I can lose my NCD without crashing into someone or something?
Small chuckle at your question. Well, 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.
Can I still retain my NCD even though I change my car insurer?
In the event you decide to renew your car insurance with a new insurance company, your NCD will apply to the new policy provided by this new insurer. NCD is something that is regulated by PIAM and not set by the insurance company and therefore, it is applicable no matter which insurance company you purchase your car insurance from.
How can NCD be an useful way to save premiums?
When you have accumulated a sizable amount of NCD percentage, that is the expect premium savings every year, therefore you would not want to claim from insurance, for just minor repairs or damages. In fact, using simple mathematics, the cost of these repairs could well be very much less as compared to the premium savings from your NCD! Therefore, sometimes it is better in the long run to pay the cost of repair yourself than to claim from your insurance company, if your car suffers a small scratch or a small dent.
There you have it. All that you need to know about No Claims Discount. Now you can rest assured that when you’re on the road, you know at least one more fact compared to your fellow counterparts on the road! Now that we have your attention, now for more money saving tips. Did you know that MSIG’s Motor Insurance is arguably the most affordable car insurance in town right now? You get 10% rebate upfront when you renew your motor insurance with MSIG, plus we hear that their pricing for Toyota cars is the most competitive right now! Best of all, as you know, you get to retain your NCD 😉