Car Insurance: To Claim or Not To Claim?

Have you ever been involved in a minor car accident? Do you file for claim to the insurance company immediately and lose all your “No Claim Discount” (NCD)?

Well, if you ever get into the same situation, take some time to work out a few things. Firstly, assess the damage and see if it’s only require minor repair or major overhaul. Run a few checks and calculations and you will be thanking me for saving you the money.

Let us assume that you had a collision with another car. The cost of repair is estimated at about RM3500 (change rear bumper, bonnet cover, repainting, rear lights… etc). Your current NCD is at 55%. What should you do?

Claim and start your NCD all over again from 0%?

For example, if your car is to be insured for RM50,000. Upon renewal, you will only need to pay a premium of RM849.03 (assume 55% NCD without windscreen cover).

Calculation of premiums:
Sum insured = RM50,000

Full Premium = [(50 – 1) x RM26] + RM251.50 + RM10

= RM1525.50 + RM10

Minus NCD 55% = (RM1525.50 – 55%) + RM10

Premium to be paid = RM696.48

Option A: Claim and Lose the NCD

Option B: No Claim and Save on the NCD

And thus, the total premium difference between the two options (to be paid over 5 years) is only RM1863.89 as compare to paying the RM3500 for repair. Well, you have done the math, which option do you choose?