UNDERSTANDING NO CLAIM BONUS (NCB) IN CAR INSURANCE

What is a No Claim Bonus?

Insurance companies revise the insurance policy premiums each year. This leads to an increased premium during policy renewal. The NCB, also called the No Claim Bonus plays a role in this situation. With the No Claim Bonus accumulated, you can significantly reduce the premium on your car insurance policy.

How is NCB calculated?

When you do not raise a claim against your motor insurance policy during the policy term, the NCB comes into effect. Simply put, you add around 20-50% of NCB to your policy for every year you have not raised an insurance claim. When this percentage is accumulated and when it is time for the policy renewal, you get a discount on the renewal premium. For instance, if you have 30% NCB accumulated in your account, you get a discount of 30% on the premium.

Benefits of NCB in your car insurance

With the benefit of getting a discount on the policy renewal premium, there are other advantages of knowing how an NCB works. Let us take a look:

• If you maintain your car properly, you are rewarded!

Insurance companies reward you for driving safely and making no claims on the insurance. This motivates people to drive carefully.

• It is granted directly to the policyholder.

The insurer grants the NCB directly to the policyholder which is a good thing when you are trying to sell the vehicle. The NCB remains intact for your new vehicle.

• It is transferable to a new insurer or a car.

In case you are buying a new car, you can transfer the NCB to the new policy. You can transfer the NCB if you are switching to another insurer.

When does an NCB get cancelled?

Your No Claim Bonus gets cancelled or stops working under the following scenarios:

If a claim request is raised, the NCB gets scrapped. If you met with an accident or are raising a claim on your car insurance, your NCB will not get accumulated.

If a policy is not renewed within 90 days of expiration, the NCB will get cancelled and the NCB discount will become invalid.

Terms and conditions of NCB

No Claim Bonus is not offered on third-party insurance coverage. It is offered only on your damage cover or a comprehensive policy.

Upon buying a new vehicle and selling your old one, make sure you transfer the NCB to the new vehicle. The insurance company will issue a certificate at the time of the transfer. There are chances that the premium could be reduced. However, this policy is at the discretion of the insurer.

How is an NCB transferred?

There are three ways in which you can transfer an NCB – online, offline, or through an agent.

You must inform your new insurance provider for transferring the NCB online. You will need to provide details like the exact NCB, the name of your previous motor insurance company, and the last policy number. The new insurer will transfer the No Claim Bonus to the new insurance policy/plan.

There are a few steps to be followed if you are transferring the NCB offline or through an agent.

Here are the steps:

• Contact the previous vehicle insurance company/provider
• Raise an NCB transfer request and produce all the necessary documents
• The company will provide a No Claim Bonus certificate after this process
• You can submit this certificate to the new insurer and the transfer shall be completed

Documents for NCB transfer

• Photocopy of car insurance
• Copy of the car delivery receipt
• Transfer application form
• NCB certificate from the former insurer
• Buyer-seller agreement (Form 29 and 30)
• Copy of ownership transfer

What is an NCB protector?

Certain insurance providers including the top ones in the game have introduced something called the NCB addon or a protector. This protects your NCB points even if you have raised an insurance claim to a certain pre-decided limit. This add-on cover nullifies the basic condition of an NCB but comes with an additional cost that covers the process.

Take away

Well, an often-asked question is – is it worth it to make small claims on your car insurance and lose out on your NCB? The answer is NO! For instance, if you have a minor accident and a tyre burst, do not use your insurance policy to cover the repairs. Instead, skip the claim and pay for its repairs yourself and go a year without any claims and gain a No Claim Bonus during the car insurance renewal.