There are various terms and concepts within car insurance that one must understand to make informed decisions before purchasing a policy. One example would be NCB. NCB is not a new concept in vehicle insurance, but people can be confused when you mention it because it is commonly referred to by another name.
In this article, we will explore more about NCB in auto insurance, how they’re calculated, and some crucial facts about them that you should know.
What is NCB?
No-Claim Bonus or NCB is a discount given for vehicle insurance premiums by insurance companies. The waiver is set by Persatuan Insurans Am Malaysia (PIAM) to encourage safe driving and acts as a reward/incentive for vehicle owners with good driving behaviour.
No-Claim Discount or NCD is an alternative term to NCB. They essentially mean the same and are used interchangeably by people. The NCB/NCD rate for new vehicles starts at zero in the first year of purchase and gradually accumulates over time.
NCB rate for vehicles
The NCB rate is set by the Persatuan Insurans Am Malaysia (PIAM), and every insurance company in the country follows it. With the NCD, The maximum discount for private cars is 55%, while motorcycles and commercial vehicles are eligible for a maximum 25% discount if no claims are submitted or made against the policy.
The NCB rates for private cars, motorcycles, and commercial vehicles are listed below:
Sample calculation:
- Sum covered: RM36,000
- Basic contribution: RM1068.67
- NCB (25%): RM267.17
- Sub-total: RM801.50
- Service tax (6%): RM48.09
- Stamp duty: RM10
- Total payable: RM859.59
Things to know about NCB
Your NCB belongs to you and not your vehicle – This means the discount is given to the policyholder instead of the vehicle. The NCB discount also applies to all insurance companies. So, if you choose to change your insurer in any particular period, the waiver can be carried forward.
Avoid claims to protect your NCB – As shown above, vehicle owners will start receiving discounts on the premium from the second year of policy renewal. The rate accumulates yearly, provided no claims are made against or submitted under their policy. So, the best way to protect your discount is to avoid accidents that may necessitate a claim.
Windscreen claims could affect your NCB – If you submit windscreen claims without additional coverage for windscreen damage, the claim will affect the NCB as it will be treated as a claim under your basic premium. Purchase additional windscreen coverage or use your money to make up for the expenses. This way, you can prevent yourself from losing the NCB if a windscreen claim becomes inevitable.
Transferring your NCB helps to maintain it – If your vehicle becomes old and begins to wear out, transferring it to a new vehicle helps retain it. This ensures you continue to benefit from your accumulated NCB even if you change your vehicle. However, transfers can only be made within the same vehicle type, such as between motorcycles and cars.
Not renewing insurance will affect your NCD – If you choose not to renew insurance for your vehicle, the accumulated NCB discount will be reversed after each year until it reaches 0%. For example, if you missed one renewal cycle when your NCB discount is 30%, the rate will be reversed to 25% for the next renewal cycle. If you continue not renewing your policy for another year, the NCB will drop to zero.
Bjak is one of Malaysia’s biggest insurance comparison websites, offering policies from over 10 brands. Get your free insurance quote from Bjak today!
Read more:
