No Claim Bonus in Car Insurance

What is NCB?

No-claim Bonus or NCB is a reward that you can avail on your car insurance premium during renewal. However, you can become eligible for NCB in car insurance by making zero claims throughout the policy tenor. The bonus starts at 20% after the first year and keeps increasing for every claim-free year thereafter. However, raising even a single claim during the policy term comes with the risk of losing the NCB in insurance.

How Does NCB Work?

With your first claim-free year, you can avail a reward of 20% on your comprehensive car insurance premium which will continue to increase by 5%-10% in every claim-free year. Moreover, this reward is transferable. The accumulated benefits can be transferred even if you buy a new vehicle or change your insurance provider.

How is No-claim Bonus Calculated?

The NCB in car insurance is applicable on renewing your comprehensive car insurance policy after a claim-free year. The bonus starts at 20% and can go up to 50% for consecutive claim-free years. Therefore, you can enjoy up to 50% reduction on your car insurance premium for raising zero claims in the policy term. You can learn how to calculate NCB for car insurance with the table below.

How to Transfer NCB When You Buy a New Car?

Transferring your old car’s NCB to the new vehicle is quite simple. All you have to do is follow the steps given below.

• Step 1: Cancel the old car insurance

• Step 2: Upon cancellation, your insurer will send an NCB retention letter

• Step 3: Show the NCB retention letter to the new insurer in order to avail the bonus

Benefits of NCB in Car Insurance

The no-claim bonus helps to reduce premiums and has several advantages, which are listed below.

• Discounts and Rewards

For every claim-free year, you get certain rewards and discounts which you can avail during the renewal of the policy by paying a lesser premium.

• No-claim Bonus Stays With You

There's no need to worry about losing your NCB when changing your car. It stays with you, not your car. Even if you change your car, your NCB scores will be yours. However, you must renew your policy on a regular basis.

• NCB is Transferable

If you are not satisfied with your current insurer and want to move to another, you can easily transfer your NCB; however, make sure you have opted for the policy before its expiry date. Also, the transfer is only available for the same type of vehicle.

• More Savings

If you maintain NCB, adhere to the guidelines, and do not file a claim for 5 years continuously, you are eligible for reasonable discounts at the time of renewing your policy.

Why Should You Opt for No-claim Bonus Protection Coverage?

A comprehensive car insurance policy is indeed a necessity. If you own a luxury vehicle, it is all the more important. However, the comprehensive car insurance premium is higher with availability of broad coverage. Here comes the NCB to save you from paying higher premium amounts. 

With NCB in car insurance, you get a certain discount on your premium, leading to high savings. Hence, you must have no-claim bonus protection.

Things to Remember About NCB in India

Below is the list that contains essential information about NCB in India:

• NCB Termination Rule

You must opt for the NCB add-on before raising the claim. And if you missed renewing your car insurance policy and the grace period (90 days) is also over, you will lose your NCB.

• NCB Proof

Keep the NCB certificate carefully; it is proof from your insurance provider.

• NCB Add-on

If you do not opt for the NCB add-on and file a claim, the NCB is zeroed out.

• Commercial Vehicles and No-claim Bonus

The terms and conditions regarding the NCB differ for a commercial vehicle. Hence, it is important that you read the agreement attentively.

When is the No-claim Bonus Terminated?

Here are all the possibilities that could terminate your no-claim bonus. 

• Raising a claim during your policy year can terminate your no-claim bonus. You can avoid this by getting a no-claim bonus protection cover. This will keep your NCB benefits active.

• If you allow your policy to relapse, your no-claim bonus will lapse too. The grace period offered by the insurer will keep your policy active, but you will lose your NCB benefits. Hence, it is important to renew your policy before or on time. 

Documents Required for NCB Transfer

Here’s a list of documents you need to transfer your earned NCB:

• Original policy copy and certificate of insurance (also called Form 51)

• Request letter for policy cancellation

• Proof of delivery of the car to the new owner

• Form 29 (notice of transfer of ownership of a motor vehicle)

• Photocopy of the registration certificate book with the name of the new owner

• Form 30 (application for intimation and transfer of ownership of a motor vehicle)

The four documents mentioned towards the end are needed only if you are selling your old car. Even though you can transfer the NCB without selling your old car, most insurance providers demand ownership transfer. However, here’s a way out: a transfer to the spouse or a family member is valid. Moreover, you can apply for an NCB retention certificate within 90 days from the date of sale. This certificate is valid for 3 years.

NCB if the Vehicle Is in an Accident or Stolen?

You must wonder what could happen to your NCB in case of an accident or your vehicle getting stolen. Here’s how your NCB might or might not be impacted by an accident or burglary. 

• In Case of An Accident

If the damages are the other party’s fault, your NCB could remain fully intact should the insurer be able to recover a majority of the expenditure. With a third-party involved, you might not be able to tell whose fault it may be. Hence, the expenses are split into half and your NCB is heavily impacted. 

• In Case of Theft

If the insurer is not able to recover the expenditure involved, your no-claim bonus will take a hit. 

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