Back to InsightsUnderstanding NCD: Your Most Valuable Motor Insurance Asset
No-Claim Discount (NCD) rewards you each year you don't claim:
| Years Without Claim | NCD Discount |
|---|---|
| 1 year | 25% |
| 2 years | 30% |
| 3 years | 38.33% |
| 4 years | 45% |
| 5 years+ | 55% |
On a RM 3,000 base premium, 55% NCD saves you RM 1,650/year. Over 10 years: RM 16,500.
The NCD Trap: When Claims Cost More Than They Save
Scenario: 5 years NCD (55%). Car damaged, repair cost RM 2,500.
If you claim:
- Lose 55% NCD
- Premium jumps from ~RM 1,350 to ~RM 3,000
- Takes 5 years to recover NCD
- Extra cost over 5 years: ~RM 5,000–6,000
If you don't claim:
- Pay RM 2,500 yourself
- Keep 55% NCD
- Net saving: RM 3,000–3,500
Rule of thumb: Don't claim if repair cost < annual NCD saving.
6 Ways to Lower Your Motor Premium
1. Choose a Higher Voluntary Excess
Adding RM 500 voluntary excess can reduce premium by 10–15%.
2. Protect Your Windscreen Separately
Some policies offer windscreen coverage that doesn't affect NCD. Use it for glass claims only.
3. Remove Unnecessary Add-ons
Review annually: special perils, passenger liability, towing — only keep what you need.
4. Declare the Correct Sum Insured
Over-declaring wastes money. Under-declaring means partial payout if written off. Get the market value right.
5. Consider Third-Party for Older Cars
Car over 10 years + worth less than RM 30,000? Comprehensive may cost more than the car is worth. Third-Party Fire & Theft at RM 400–800/year may suffice.
6. Compare and Pay Annually
Since motor insurance liberalisation (2017), prices vary significantly. Compare quotes and pay annually to avoid the 5–8% monthly installment charge.
Comprehensive vs Third-Party
| Coverage | Comprehensive | Third-Party F&T | Third-Party |
|---|---|---|---|
| Your car (accident) | ✓ | ✗ | ✗ |
| Your car (fire/theft) | ✓ | ✓ | ✗ |
| Other party's car | ✓ | ✓ | ✓ |
| Premium | Highest | Mid | Lowest |
