Your No Claim Discount (NCD) directly reduces the amount you pay for motor insurance in Malaysia.
The higher your NCD percentage, the lower your basic premium at renewal.
Understanding exactly how this calculation works helps you estimate renewal costs and evaluate whether making a claim is financially worth it.
How NCD Is Applied to Your Premium
NCD is calculated as a percentage discount on the basic premium only.
It does not apply to:
- SST (Sales and Service Tax)
- Stamp duty
- Additional add-ons (windscreen, special perils, etc.)
It strictly reduces the core insurance premium.
Example: How NCD Reduces Your Premium
Let’s assume:
Basic premium: RM1,500
NCD: 55%
Step 1: Calculate discount
RM1,500 × 55% = RM825 discount
Step 2: Deduct from basic premium
RM1,500 – RM825 = RM675
You now pay RM675 (before taxes and add-ons).
That is a significant saving.
Comparison: Premium at Different NCD Levels
NCD Percentage | Basic Premium RM1,500 | Amount Payable |
0% | RM1,500 | RM1,500 |
25% | RM1,500 | RM1,125 |
38.33% | RM1,500 | RM925 |
45% | RM1,500 | RM825 |
55% | RM1,500 | RM675 |
The difference between 0% and 55% is RM825.
That is why protecting your NCD matters.
What Happens to Your Premium After a Claim?
If you make an own damage claim, your NCD typically resets to 0%.
Using the same example:
Before claim (55% NCD): RM675
After reset (0% NCD): RM1,500
That’s an increase of RM825 at renewal.
This is why some drivers choose not to claim for minor repairs.
When Does NCD Not Affect Premium?
Your NCD may remain intact if:
- The claim is a windscreen-only claim
- You are not at fault and insurer recovers cost from third party
- You purchased an NCD Protector add-on
Always confirm policy terms before assuming protection applies.
Should You Claim or Pay Out of Pocket?
Before making a claim, calculate:
- Repair cost
- Expected premium increase next year
- Loss of accumulated NCD
If repair cost is lower than long-term premium increase, paying directly may be financially smarter.
However, serious accidents should always be reported properly.
Does NCD Affect All Insurance Components?
No.
NCD affects:
✔ Basic motor premium
It does not affect:
✘ Road tax
✘ Personal accident riders
✘ Special add-ons
Understanding this prevents confusion during renewal.
Long-Term Impact of Maintaining 55% NCD
If your average basic premium is RM1,500:
Annual savings at 55% = RM825
Over 5 years:
RM825 × 5 = RM4,125 saved
That is significant cumulative value.
Frequently Asked Questions About NCD in Car Insurance Premium
Does NCD reduce total premium or basic premium?
Only the basic premium.
Will switching insurers affect my NCD?
No. Your NCD record follows you across insurers in Malaysia.
Does third-party claim reset NCD?
If you are not at fault and recovery is successful, usually no.
Final Thoughts
Your NCD percentage has a direct and substantial impact on your motor insurance premium.
Before renewing or making a claim, always calculate the financial difference. Understanding how the discount works gives you better control over long-term insurance costs.
If you need a refresher on how NCD works overall, refer to our complete guide on insurance NCD meaning in Malaysia for the full breakdown.
Need Help With Your Car Insurance Claim?
We’re here to guide you on:
✅ Claim advice
✅ NCD retention
✅ Best-value insurance plans
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