How to Transfer Your NCD & Carry Your Insurance Savings Over to Your Next Car

For most of us, owning a car is not cheap. With the monthly loan installments, maintenance costs, road tax, and insurance, it’s easy to see how quickly the cost of owning a car can climb. Fortunately, the no claim discount (NCD), which is available to all car owners in Malaysia can help you save on your yearly car insurance premium. What’s more, you can even transfer your NCD whenever you buy a new car, ensuring that you retain those savings.

So what exactly is an NCD and how do you transfer a car NCD in Malaysia? We’ll discuss it further below.

man checking scratch on car bumper

What Is a No Claim Discount (NCD)?

NCD or a no claim discount, is a form of discount that is offered by insurance providers to you (the vehicle owner) if you haven’t made any claims against your motor insurance policy in the past year. NCD is applied every time you renew your motor insurance, so the longer you go without claiming against your motor insurance, the more you save on your premium. This acts as an incentive to encourage safe driving and indirectly helps to reduce the number of road accidents.

In Malaysia, you can enjoy a maximum discount of up to 55 percent from your NCD if you don’t claim against your insurance for six consecutive years and above. Here’s how your NCD can be preserved and carried forward to the next year:

  • No claims have been made in the 12 months prior to the date of renewal of your motor insurance.
  • No accident claims have been made against your insurance policy by a third party in the past 12 months.

How to Calculate Your NCD Rate?

The NCD rate is set by Persatuan Insurans Am Malaysia (PIAM) and varies according to the type of vehicle. The different NCD categories in Malaysia are private cars, motorcycles, and commercial vehicles. The maximum discount obtainable is capped at 55 percent for cars and 25 percent for both motorcycles and commercial vehicles. Below are the NCD rates for the different vehicle types.

No Claim Period  Private Car (%) Motorcycle (%) Commercial Vehicle (%)
1st Year 0 0 0
2nd Year 25 15 15
3rd Year 30 20 20
4th Year 38.33 25 25
5th Year 45 25 25
6 Year Onwards 55 25 25

When you renew your car private car insurance in the second year, you’ll obtain a 25 percent discount on your premium if you haven’t made any claim against your insurance policy in the past 12 months. In the sixth year, which is after five years of not making any insurance claim, you’ll obtain the maximum NCD rate of 55 percent. You can enjoy this discount for the rest of your life, as long as there are no claims against your policy.

Read More: 5 Misconceptions about Pre-owned Cars Busted

How to Transfer Your NCD to a New Car?

You can transfer your NCD to another car to continue enjoying a discount on your insurance premium. However, there are two conditions you need to fulfill before doing so.

  • Both vehicles must belong to the same owner: Both the old and new cars must be registered to your name and identity card. That means if you’re buying a car or taking over a car from a family member, you have to change the ownership of the car at the Road Transport Department (JPJ) before transferring your NCD.
  • Both vehicles must be of the same type: You can only transfer NCD between vehicles of the same type, meaning from a private car to another car or from a motorcycle to another motorcycle. This is because the NCD rate varies between different vehicle types.

Steps to Transfer Your NCD to a New Car in Malaysia

Transferring your NCD to another car is actually an easy process. Here are the steps you have to follow to do it.

  1. Prepare the necessary documents including a copy of your MyKad and bank details.
  2. Go to the nearest branch of your car’s insurance provider and fill up the form to transfer your NCD. You’ll receive a copy of the form once your application has been approved.
  3. If you have a remaining balance on your premium, you’ll have to pay it before renewing your new car’s insurance. You can usually make payments in cash or online.
  4. Next, you just need to renew the insurance for your new car and provide the necessary documents including the copy of the NCD transfer form mentioned in step 2.
  5. If your insurance has expired, you can renew the insurance for your current/old car and reset its NCD to 0 percent. Then, present your old car’s vehicle ownership certificate (VOC). Make sure it’s the latest VOC which should display the highest NCD rate you have when renewing the insurance for your new car to transfer the NCD.
  6. Don’t forget to double-check your new NCD rate and make sure all your information is accurately updated.

Car insurance

Read More: How to Claim Your 1-Year CARSOME Extended Warranty

What Happens to Your NCD If You Get Involved in an Accident?

If you get into an accident and are at fault, you will get your NCD reset to 0 percent when you make a claim against your policy. However, getting involved in an accident won’t necessarily reset your NCD as it depends on who is at fault and how the accident claims are settled. Here are some situations where being in an accident won’t affect your current NCD.

  • When you or the third party involved chooses to cover the repair costs on your own without claiming against your policy. This usually happens when the accident is minor and the repair cost is small. However, you can also choose to pay for the repairs out of pocket if the cost is lower than the savings you enjoy from your NCD. This is an option some drivers take especially if their basic insurance premium is high.
  • If you’re involved in an accident and are not at fault. Once the police confirm that you’re innocent after you make your police report, you can file a No-Fault Own Damage claim (NFOC) against the insurance provider of the third party involved.
  • If you have additional coverage such as a windscreen cover, you can claim for a windscreen repair without it affecting your NCD. You can also get a special perils coverage which covers damage from floods, landslides, and other natural disasters.

How Much Can You Save with an NCD Transfer?

The amount you can save by doing a car NCD transfer depends on the value and insurance premiums of your cars. If you transfer the NCD from a lower-valued car to a higher-valued car, such as from a Perodua Myvi to a Honda Civic, you’ll be able to save a good amount of money on your insurance premiums. Here’s an estimated breakdown of what you’d need to pay with and without doing an NCD transfer.

Without Transferring Your NCD With Transferring Your NCD

Insurance premium of your old car (Perodua Myvi): RM800

Insurance premium of your new car (Honda Civic): RM4,000

Perodua Myvi: RM360 (RM800 – 55% NCD)

Honda City: RM4,000 (0%)

Perodua Myvi: RM800 (0%)

Honda City: RM1,800 (RM4,000 – 55% NCD)

Total premium: RM4,360 Total premium: RM2,600

Based on the table above, you can save RM1,760 if you transfer the NCD from a Perodua Myvi to a Honda Civic. So, the next time you buy a car, make sure to transfer your NCD so you can enjoy better savings on your insurance premium. 

car steering wheel

Other Things to Know About Your NCD

If you still have doubts about transferring your car NCD in Malaysia, here are the answers to some common NCD-related questions

1. Can I transfer the NCD from my car to my motorcycle?

No, you can’t transfer the NCD from one vehicle type to another.

2. How much NCD do I have if I’m buying a car for the first time?

If you’re a first-time car buyer, you wouldn’t have any NCD to your name. Therefore, your NCD rate will be 0 percent and will accumulate until you reach the maximum NCD of 55 percent, provided that you have not claimed against your insurance policy.

3. Does my NCD expire? How long does it last?

Your NCD won’t expire if you renew your motor insurance every year and don’t claim against your policy. However, if you skip renewing your motor insurance the next year, your NCD rate will drop one tier and continue dropping for every year that you skip your insurance renewal. For example, if you have a 55 percent NCD and skip renewing it next year, then the NCD will drop to 45 percent. If you don’t renew your motor insurance, your NCD will continue to decrease until it eventually reaches 0 percent after about five years. 

Read More: What to Do in a Car Accident

We hope this article on how to transfer your NCD can help you when you get a new car in the future. If you’re looking for an affordable, quality pre-owned car, check out CARSOME. We put all CARSOME Certified cars through a stringent 175-point inspection. Additionally, we professionally refurbish each one to ensure their safety, comfort, and quality. 

Each car also comes with a guarantee of a fixed price with no hidden fees, a one-year warranty, and a five-day money-back guarantee. 

So, what are you waiting for? Visit CARSOME to find your dream car today.