NCD 55% Explained: How Many Years to Reach It and Protect It

If you have been driving for several years without making a car insurance claim, you may have noticed your No Claim Discount (NCD) getting higher each year.

For private cars in Malaysia, the maximum NCD is 55%.

But how many years does it take to reach 55%? What happens if you make a claim? And can you protect your NCD?

Let’s break it down.

What Is NCD and Why Does It Matter?

NCD stands for No Claim Discount.

It is a discount on your car insurance premium that you can accumulate when you go through your policy period without making a claim that affects your NCD.

For private cars, the discount increases over consecutive claim-free years until it reaches a maximum of 55%.

In simple terms, a higher NCD can mean a lower insurance premium.

For example, if your base premium is RM2,000 and you have a 55% NCD, the NCD portion would reduce the base premium by RM1,100, leaving RM900 before other applicable charges or adjustments.

The actual amount you pay can vary depending on your policy, vehicle and insurer.

How Many Years Does It Take to Reach 55% NCD?

For private cars in Malaysia, the NCD schedule is:

Claim-Free Period	NCD
After 1 year	25%
After 2 years	30%
After 3 years	38.33%
After 4 years	45%
After 5 years and above	55%

So, it takes five consecutive claim-free years to reach the maximum 55% NCD for a private car.

Once you reach 55%, the discount can remain at that maximum level as long as you continue to meet the applicable requirements.

This is why maintaining your NCD can make a difference when you renew your car insurance each year.

How to Protect Your NCD

One way to protect your NCD is to understand when making a claim could affect it.

If you are involved in an accident and make an Own Damage (OD) claim, your NCD entitlement will generally be affected at renewal. Bank Negara Malaysia notes that an Own Damage claim where you are at fault results in the loss of your NCD entitlement.

However, not every claim necessarily affects your NCD in the same way.

For example, if an accident was caused by another driver and you meet the relevant requirements, you may be able to make an Own Damage Knock-for-Knock (OD-KFK) claim without affecting your NCD.

You may also find insurers offering an NCD protection or NCD relief add-on.

The terms vary between insurers. Some products may compensate or protect your NCD following a qualifying claim, so check the specific policy wording before purchasing.

Transferring and Keeping Your NCD

Your NCD is linked to the policyholder, rather than permanently tied to the physical car.

If you buy another car, your accumulated NCD may be transferred to the new vehicle, subject to the applicable requirements and procedures.

PIAM explains that the transfer is not automatic. You generally need to inform your insurer that you want to withdraw the NCD from the old vehicle, after which the insurer updates the NCD status and provides the relevant confirmation for use with the new policy.

Your NCD can also be carried over when you change insurers, subject to the insurer’s verification and applicable policy terms.

This is why it is important to check your NCD when renewing or changing your car insurance.

Quick Comparison: Make a Claim vs Pay Out of Pocket

Not every small repair should automatically be paid for yourself.

Instead, consider the potential repair cost against the NCD you could lose and the resulting impact on future premiums.

	Make a Claim	Pay Out of Pocket
Immediate repair cost	May be covered under your policy, subject to terms	You pay the repair cost yourself
NCD	May be affected depending on the type of claim	Generally remains unaffected
Future insurance cost	May be higher if NCD is affected	NCD discount can continue
More suitable for	Larger repair costs or covered losses	Smaller repairs where paying yourself makes financial sense

For example, if a minor repair costs RM300 but losing your NCD could result in a much larger increase in your future insurance cost, you may want to compare both options before making a claim.

However, this does not mean you should avoid making claims altogether.

For a major accident or expensive repair, using your insurance may still make financial sense.

The right decision depends on the repair cost, your NCD level, policy terms and ability to pay the repair yourself.

How Bjak Helps You

When you renew your car insurance through Bjak, your NCD can be checked as part of the renewal process so that the applicable discount can be reflected in your quotation.

Bjak also allows you to compare available insurance options and premiums from multiple insurers.

This can make it easier to check whether your NCD has been applied correctly and compare your renewal options before making a decision.

You can also use Bjak’s NCD checker to check your NCD information.

Conclusion

For private cars in Malaysia, reaching the maximum 55% NCD takes five consecutive claim-free years.

But building your NCD is only part of the picture.

You should also understand how different types of claims can affect it, how to transfer your NCD when changing cars, and whether an NCD protection add-on is suitable for you.

Before making a small claim, compare the repair cost with the potential financial impact of losing your NCD.

For larger repairs or accidents, however, making an insurance claim may still be the more practical option.

Most importantly, check your policy terms and confirm how a particular claim will affect your NCD before making a decision.

Check your NCD and compare your car insurance options with Bjak.my before you renew.