What is NCD (No Claim Discount)?
No Claim Discount, commonly referred as NCD is a vital part of your car Insurance. The amount of your insurance premium payable or saving is dependent on your NCD entitlement. As the name suggest, this no claim discount is extended to you when you do not make any claim toward your insurance during the in force period. Thus, when you renew your insurance for the next 12 month period, you are entitled to this no claim discount (NCD).
The NCD is tied to your name and not a car. Thus, it is actually transferable. Meaning that if you sell off your car and get yourself a new car, your new car insurance can be applied with your entitled NCD. In the event that you are selling off your old car, remember to cancel that policy as any remaining period covered not used can be refund to you.
Although the name is called No Claim Discount, it does not means you cannot claimed against your own insurance. In the event of an accident, which you are not at fault, you are entitled to claim your own insurance for repair and yet you do not lose your NCD. Your NCD will only be lost if you are involved in an accident and you are at fault, resulting in other parties claiming against you.
Once your insurance has been claimed, you lose your NCD entitlement and it is reverted to zero (0%) – no discount.
But if you have not been involved in any accident, your NCD entitlement will increase over the years. The maximum NCD one can entitled to is 55%.
What is Excess?
Excess refers to the amount that you are require to pay as per the policy terms & conditions in respect of each and every claim payable (including cost and expenditure incurred by the insurance company to conduct, defense and settlement of any claim for the loss or damage to your vehicle, and damage to third party resulted from the accident arising out of the use of your vehicle for liability to third parties), in addition to any other excess that may be applicable. For example, the excess of your policy is RM100 and the total claim amount is RM2,000. Your car insurance company will pay out RM1,900 for the claim while you have to pay the remaining RM100.
The above refers to policy excess, that is imposed by the car insurance company. Take note that there will be Compulsory Excess Fee, in situation outlined by PIAM Motor Tariff as below:
A person with a probationer license (“L” license).
A person with a “P” license.
A person below 21 years old.
A person who is not a named driver.
This compulsory Excess is fixed at RM400.
So, check your insurance policy to see if you have an ‘excess’ on your policy, and in an unfortunate event which you have to make a claim, you will have to borne part of the claim as per your excess fee. In the event that you allow anyone to drive your vehicle as mentioned above, example, anyone below 21 years old etc, and it resulted in an insurance claim, you will be responsible for the compulsory excess of RM400.
What is Betterment?
When your damaged car was sent for repair, it is normal that some damaged parts are replaced with new franchise parts. In this case, you car appears to be in a better condition prior to accident. In fact, it is against the insurance principle of indemnity. Insurance is intended to indemnify your loss, and no profit should be obtainable. But, in the case of repair where old parts (damaged) are replaced with new parts, the car owner actually benefits.
Thus, as a car owner, your insurance company may require you to bear the difference in costs. Application of betterment is at the discretion of the insurance company, but should they apply for betterment, it will be according to the standard scale of betterment adopted by the industry.
For Car below 5 year – 0%
5 years – 15%
6 years – 20%
7 years – 25%
8 years – 30%
9 years – 35%
10 years and above – 40%
