How NCD Is Calculated in Malaysia (Simple Explanation)
If you’re renewing your car insurance, understanding how NCD is calculated in Malaysia can help you estimate your premium and maximise your savings.
In Malaysia, the No Claim Discount (NCD) rewards safe drivers with lower insurance premiums for every year they remain claim-free.
What Is NCD?
NCD (No Claim Discount) is a percentage discount applied to your base car insurance premium when you do not make any claims during the policy year.
The more claim-free years you accumulate, the higher your NCD percentage becomes.
NCD Rate for Private Cars
This is the standard NCD structure commonly used by insurers in Malaysia:
1st claim-free year: 25%
2nd claim-free year: 30%
3rd claim-free year: 38.33%
4th claim-free year: 45%
5th claim-free year and above: 55%
How Is NCD Calculated?
The formula used to calculate your premium after NCD is:
Premium after NCD = Base Premium × (1 - NCD%)
Example 1: Mid-Level NCD
Base premium: RM1,200
NCD: 30%
Final premium: RM840
Example 2: Maximum NCD
Base premium: RM1,200
NCD: 55%
Final premium: RM540
If you renew during limited-time campaigns, additional discounts or Free Road Tax offers (capped) can further reduce your total cost.
Does Every Insurance Claim Reset NCD?
Not all claims affect your NCD the same way.
At-fault accident claims generally reset your NCD.
Theft claims reset NCD to 0% at the next renewal, similar to other claims.
Windscreen claims do not affect NCD because windscreen coverage is treated as a separate add-on.
Why Understanding NCD Matters
Understanding your No Claim Discount is important because it directly affects your renewal cost.
Benefits of maintaining a high NCD include:
Lower annual insurance premiums
Transferable NCD between insurers
Eligibility for NCD protection add-ons
Combining a high NCD with time-based renewal promotions is often one of the best ways to reduce your total insurance cost.
Frequently Asked Questions
How can I check my current NCD rate?
You can check your current NCD via MyCarInfo using your IC and car plate number.
Can I transfer my NCD to another insurer?
Yes. Your NCD is tied to the policyholder and vehicle, not the insurer.
Do windscreen claims affect NCD?
No. Windscreen claims under windscreen coverage do not reset your NCD as it is categorised as an add-on.
Does every accident reset NCD?
Depends. If you make a claim for an own-fault damage, your discount will reset to 0% at the next renewal. If you are not at fault, you can recover the claim from the third party, which protects your NCD from being reset.
How can I maximise NCD savings?
Avoid making small claims when possible, maintain continuous coverage, and combine high NCD with renewal promotions for better overall savings.
