Insurance Service Malaysia No Claim Discount (ISM NCD) – Insurance Guides For YOU

Insurance Service Malaysia No Claim Discount (ISM NCD) MALAYSIA

What is NCD?
A No-Claim Discount also known as NCD is a reward scheme in form of a discount offered to car owners when they renew their car insurance if they have not made a claim on their policy for more than one year.

This simply means that every year you don’t make a claim against your car insurance policy; your discount is accumulated and you get more reduction from your premium.

It is a reward given to drivers for safe driving.

Insurance Service Malaysia (ISM) NCD
ISM insurance service Malaysia Berhad was formed by the General Insurance Association of Malaysia (PIAM) with an aim to establish databases which support standardized pricing. ISM came up with a central NCD database system where insurers and takaful operator can get information on NCD status. This also aimed to reduce the incidences of fraud and premium leakage.

Insurance Service Malaysia(ISM) has also made it possible for car owners to easily learn of their NCD entitlement through an online portal for free.

How much is NCD in Malaysia
The NCD rate you get is set and determined by Persatuan Insurans Am Malaysia(PIAM) which is the same in all the insurance companies in Malaysia. The discount varies depending on the type of vehicle in question. Private cars tend to get more discounts as compared to commercial vehicles and motorcycles.

Below is a table illustrating what your NCD entitlement is, depending on the type of car and number of years you have gone without making a claim.

Insurance Period Private Vehicle Commercial Vehicle Motorcycle
1st Year 25% 15% 15%
2nd Year 30% 20% 20%
3rd Year 38.3% 25% 25%
4th Year 45% 25% 25%
5th Year and More 55% 25% 25%


How Does NCD in Insurance Work?
You are only entitled to get this discount if you had stayed for at least a year without making a claim against your car policy. This means that if you are a new car owner and you are taking insurance for the first time, you will not get a discount and you will be required to pay the full premium amount. You will receive your first discount when you renew your policy a year later if you had not made a claim. In this case, you will receive a discount of 25% for a private car or 15% if you are renewing for a commercial vehicle or motorcycle. If by two years you have not yet made a claim, the discount further increases to 30% for private car and 20% for commercial car and motorcycle. The discount goes on increasing every year you go without making a claim of up to 55% for a private vehicle.

However, when an accident does happen and you have to make a claim, your NCD reverts back to 0% and you will be required to pay the full insurance amount when you renew your policy. You will start getting your discount again after you finish 12 months claim-free in which the discount start back at 25%.

How to Make a Claim
If you are involved in an accident, you have an option of making either an own damage claim or a third party claim if you have a Comprehensive cover policy:-

Own- Damage Claim
This entails making a claim on your comprehensive policy. You will, however, lose your NCD entitlement.

When you notify your insurer about an accident, you should also inquire for the names of approved workshops where you can take your vehicle for repairs. Make sure that you have completely filled the Motor Accident Report Form and submitted it to your insurer together with all the necessary documents i.e. original police report, the workshops estimated repair cost, copies of your insurance policy, your identity card and driving license.

The repairs to your vehicle will commence as soon as your insurance company approves your claim and you will be contacted by the workshop when your car is ready.

No-Fault Own Damage Claim
This is where an accident happens but the third party is the one at fault. You will be required to provide a police report and signed declaration letter (for a no-fault accident) to your insurer showing that you are not to blame for the accident. Then you can be able to make an ‘Own Damage Knock-for-Knock’ claim in which case your NCD entitlement will not change.

Certain insurance companies may have their own procedure that you will be required to follow so it is advisable to stay informed on new policy updates.

Third Party Claim
If an accident happens and you are not at fault, you can opt to make a third party claim and retain your NCD privilege.

Third party claim can be done in two ways. You can either submit the claim to the insurance company of the party to blame or you can submit the claim to your own insurance company (if you have a comprehensive cover). Submitting to your insurance company is encouraged because the claims are processed much faster.

Important Factors to Know about No-Claim Discount (NCD)
No-Fault Damage
This is where an accident happens that is not your fault and you make a claim against your comprehensive policy. Your claim will be processed and you will still retain your NCD.

Windscreen coverage
Windscreens are quite expensive to replace, that’s why some people opt to have windscreen cover as an add-on to their motor policy. If you have a windscreen cover, your insurer will pay for any replacement or repairs without you losing your NCD.

However, if you don’t have a windscreen cover and you make a claim, your NCD will be lost. It is, therefore, very important to carefully consider and understand what works best for you.

There are times when it is better to pay for the repair yourself rather than making a claim and losing your NCD.

NCD is transferable
NCD applies to the policy owner and not the vehicle. This means that if you had an NCD of 45% and you decide to sell your current car and get a new one, you can very easily transfer your NCD of 45% to the new car.

However, NCD cannot be used in more than one car, so if you are buying a new car and keeping the old one, the new car NCD will start from zero. We recommend that if you have two or more cars, you should place the higher NCD for your most expensive car so as to save more on premiums.

Also note that if you sell your current car and don’t transfer your NCD to your new car for one reason or the other, your NCD starts dropping every year until it reaches 0%.

The NCD is tied to your name; therefore, it cannot be transferred to another person.

Changing Insurers
If you decide your insurer, you will still retain the NCD that you had accumulated. This is because NCD is not something that is set by individual insurance companies. It is regulated and applies to all motor insurance companies in Malaysia.

Where to Check Your ISM NCD Status
You will learn about your NCD entitlement when you renew your car insurance from your insurer.

You can also check your NCD status online through this ISM supported link: You will only be required to provide your vehicle registration number and your identification number.

You should also note that if for any reason your NCD entitlement has been canceled or you note some discrepancies with the amount, you should contact your insurer or takaful operator for clarification.

Motor Insurance is compulsory in Malaysia and can be a bit costly. A No-Claim Discount (NCD) is a great way of cutting down on some premium for up to 55%. It also promotes safe driving and encourages car owners to be a little more informed on car insurance. You start getting NCD after you have gone for at least 12 months without making a claim. The discount starts at 25% up to 55% for private cars.

The NCD is also transferable since it is attached to the name of the car owner. You can opt to transfer from one car to the other but you are not allowed to use it in more than one car. You are also able to retain the NCD even if you move to another insurer. If you don’t know what your NCD status is, you can easily find out through the ISM online portal for free.

Understanding your policy is very important. It can protect your right as a consumer and also save you from unnecessary costs. Make use of your insurers’ customer support line and always ask for elaboration of things you don’t understand in your policy.

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