What is NCD in Car Insurance

No Claim Discount (NCD), also known as Bonus Malus, refers to a discount on insurance premiums provided to vehicle owners without insurance claims in the past 12 months. Vehicle owners in Malaysia can use NCD if no third-party claims are made against the car insurance policy. NCD discount serves as a reward for safe driving and maintaining a claim-free record.

The rate of NCD is set and regulated by the Persatuan Insurans Am Malaysia (PIAM) Motor Tariff, which is a system that allows car owners to earn discounts over time if they do not make any claims against their insurance policies each year. The NCD rates range from 25% to 55% on the premium payable and are earned by maintaining a claim-free record. The NCD rate increases yearly to a maximum of 55% after five years as long as no claims are made during those years.

Impact of NCD in Insurance Policies

Car insurance policies offer a No Claim Discount (NCD) to reward the insured for maintaining a claim-free record and promoting safe driving practices. Similarly, motorcycle and commercial vehicle insurance policies extend NCD benefits, encouraging safer riding habits and helping businesses lower operational costs by maintaining a good claim record. The NCD percentage significantly influences the insurance premium, with higher discounts for a more extended claim-free period, ensuring substantial savings over time.

NCD rates in Malaysia

The No-Claim Discount rate is set by Persatuan Insurans Am Malaysia (PIAM) and is followed by every motor insurance company in Malaysia. For motor insurance, the maximum discount is 55% for cars and 25% for motorcycles.

No-Claim PeriodPrivate CarMotorcycleCommercial Vehicle
1st year0%0%0%
2nd year25%15%15%
3rd year30%20%20%
4th year38.33%25%25%
5th year45%25%25%
6th year onwards55%25%25%
NCD rates for private cars, motorcycles, and commercial vehicles

From the second year of renewing your private car insurance, you’re eligible for a 25% discount on your basic premium as your NCD starts accumulating from the first year of insurance.

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

NCD savings

NCD (No Claim Discount) savings refer to the reduction in premium costs that policyholders can enjoy due to their good driving record and lack of claims over a specified period, usually a year.

If we use an insurance premium of RM1,500, the calculation would be as follows:

Assuming your Proton Persona’s basic insurance premium is RM1,500 this year, you’ve been a good driver for over six years without an accident or a claim. You would be entitled to a 55% NCD, which would be deducted from your basic premium.

The NCD amount would be RM1,500 * 55/100 = RM825.

So, your new basic premium after the NCD would be RM1,500 – RM825 = RM675 (not including any add-on coverage, service tax, or stamp duty). This means you would save a total of RM825 on your car insurance premium.

NCD Claim Process and Settlement

Filing a claim can affect your NCD, resetting the discount percentage and increasing the premium for the subsequent policy period. Claim settlement follows the filing of a claim, needs assessment of damages and the disbursement of the necessary compensation. This process requires thorough documentation to provide evidence of the incident and the extent of damages incurred. Assessment in the claim process will determine the claim’s validity and compensation amount. Subsequently, repair and compensation are facilitated due to claim settlement, restoring the damaged asset and alleviating any financial loss.

NCD Transfer

An NCD Certificate allows for the transfer of NCD from one vehicle to another, ensuring that policyholders retain their hard-earned discounts. The prerequisites for transferring NCD include having an NCD Certificate, which acts as proof of your claim-free record to the new insurer.

This process facilitates NCD on a new vehicle, allowing policyholders to continue enjoying premium discounts. NCD recovery is a process in NCD proof and transfer, ensuring that policyholders do not lose their earned discounts.

NCD Calculation and Maximum Discount

The maximum discount is a part of the NCD calculation, capping the discount rate regardless of additional claim-free years. NCD accumulation occurs over claim-free years, gradually increasing the discount percentage on the insurance premium. It may affect your NCD during policy renewal, especially if there have been claims in the previous policy period.


NCD serves as a significant factor in determining the amount of insurance premium a car owner has to pay, and promotes safe driving by offering financial incentives for maintaining a claim-free record.

Read more about NCD enquiry and checking online.

Leave a Comment