No Claim Bonus in Four Wheeler Insurance

Have you ever examined a car insurance policy and found yourself asking “what is No Claim Bonus in car insurance?” If so, you have come to the right place. This article serves as a great reference that you can use to understand what this term means. The popular acronym used to refer to No Claim Bonus is “NCB”.

 

No Claim Bonus in car insurance refers to the benefit that a policyholder is entitled to in the event he (or she) doesn’t make any claims during the course of their insurance tenure being active. It can be viewed as a reward issued to policyholders for obeying road safety rules and traffic regulations over a given year. A No Claim Bonus in car insurance is provided in the form of a discount which is applied to the premium tethered to the Own Damage (or OD) aspect of a car insurance policy.

 

Provided you complete your first claim-free year, you are entitled to a discount of 20 per cent which applies to your comprehensive car insurance policy premium. This percentage will continue to rise by 5 to 10 per cent each claim-free year.

NCB Calculation for Car Insurance

The NCB protection offered in car insurance policies kicks in once you renew your comprehensive car insurance policy after having completed a claim-free year. While the No Claim Bonus in car insurance has a starting value of 20 per cent, it can increase to 50 per cent: provided you have consecutive claim-free years. This means that you can enjoy a 50 per cent discount on the premium of your car insurance policy owing to zero claims during the active policy term.

 

If you are now wondering how to calculate NCB for car insurance, simply refer to the table mentioned below to gain more clarity. 

No. of Claim-Free Years

NCB Discount

After 1 year

20%

After 2 year

25%

After 3 year

35%

After 4 year

45%

After 5 year

50%

 Benefits of NCB in Car Insurance

There are several merits associated with availing a No Claim Bonus in car insurance. Some of the important benefits have been discussed below.

1. Avail of a Lower Premium

Provided you do not raise a single car insurance claim throughout your policy year, you can avail of a discount of 20 per cent. If you can continue without raising any claims in consecutive years, you can avail of a greater discount. This considerably lowers the premium on your comprehensive car insurance policy which means greater savings for you.

2. NCB Transfer to a New Car is Easy

If you were ever worried that your No Claim Bonus in car insurance was tethered to one car and wasn’t capable of being transferred, we’ve got some news for you. You can transfer your NCB reward to a new vehicle with ease. If you sell your old car and purchase a new one or choose to change your insurance provider, you can have your No Claim Bonus in car insurance transferred fairly easily. This means that you can purchase a premium policy at a discounted value for your new car.

3. Take Advantage of a Great Discount

Provided you can avoid claiming insurance for five consecutive years, you can avail of a 50 per cent discount on the premium of your car insurance plan. Cautious driving throughout the year and zero claims can benefit you tremendously and help you save money.

How to transfer NCB to a new car?

No Claim Bonus in car insurance can be transferred from your present four-wheeler to a newer vehicle you purchase with ease. All you have to do is inform your insurance provider so that they can issue a No Claim Bonus certificate. This certificate will allow you to purchase a policy at a discounted premium rate.

Documents Required for the NCB Transfer

Listed below are the documents needed:

 

  • A duly filled No Claim Bonus transfer application.

  • The No Claim Bonus certificate.

  • A copy of your car insurance policy.

  • The buyer-seller agreement i.e. Forms 29 and 30.

  • A copy of the older transfer registration certificate or the certificate of ownership transfer: in case you sell your old car.

  • If your old car has been sold, you need to provide a copy of the delivery note.

  • If you have bought a new car, you need to provide a copy of the booking receipt.

Termination of your Car Insurance Policy’s No Claim Bonus

Two situations can lead to termination of your No Claim Bonus in car insurance:

 

  • In the event that you do not renew your car insurance plan within the grace period outlined in your policy, your policy will lapse and your No Claim Bonus will be lost.

  • If you make any claims while your policy is active, the No Claim Bonus in car insurance will be canceled. You will not be provided with the discount applied to the premium of your renewed car insurance plan.

Retaining your Car Insurance Plan’s No Claim Bonus with NCB Protection Cover

In the unfortunate event that you undergo a major accident involving your insured vehicle, you are likely to raise a claim with your insurance provider. Now, as things stand, a single claim alone can lead to the termination of the No Claim Bonus in car insurance. This in turn can prevent you from getting a discount on your renewal premium. You can avoid this situation by availing of the No Claim Bonus Protection Cover.

 

This add-on cover must be purchased separately, in addition to your car insurance plan. Ownership of this rider allows you to make a specified number of claims without the fear of losing your No Claim Bonus reward. Therefore, it serves as a safeguard measure designed to protect you from losing your No Claim Bonus (and its benefits) while being able to claim insurance in the event of vehicular damage.

Before purchasing the No Claim Bonus Protection Cover, it is recommended that you carefully read the terms and conditions applicable to understand how many claims are permitted.

Bottom Line

As far as the No Claim Bonus in car insurance is concerned, it is important to bear in mind that its transfer certificate is valid for three years only. It is imperative that the transfer is completed within the outlined time frame so that you don’t lose out on your bonus. Further, you should avoid making minor insurance claims so that you can hold onto a valid No Claim Bonus.

 

Given the increasing number of vehicular accidents being reported each year, it is important to have a valid car insurance plan that is comprehensive in its scope. In addition to accidental vehicular damage, such plans provide financial protection against natural calamities, man-made disasters and theft.

 

Therefore, if you haven’t already purchased such a plan, visit the Finserv MARKETS website and select the best car insurance plan for your vehicle. Take advantage of the car insurance premium calculator so that you have a rough idea of what your car insurance policy premium will amount to. 

FAQs in No Claim Bonus in Car Insurance

  • ✔️Can I purchase a No Claim Bonus Protection Cover for my third-party liability car insurance plan?

    No, you cannot purchase a No Claim Bonus Protection Cover for your third-party liability car insurance plan. This is because No Claim Bonus, as well as the No Claim Bonus Protection Cover, apply only to a comprehensive car insurance policy. 

  • ✔️Can a single No Claim Bonus discount be used to cover multiple vehicles?

    No, a single No Claim Bonus discount cannot be used to cover multiple vehicles. If you happen to own multiple vehicles, you must get each of them their own car insurance policy and work towards creating No Claim Bonuses for each of them. 

  • ✔️Do third party claims impact my No Claim Bonus?

    No, third party claims do not impact the percentage of your No Claim Bonus.

  • ✔️Does No Claim Bonus continue to hold even if I change the kind of car I own?

    Yes, No Claim Bonus continues to hold even if you change the kind of car you own. 

  • ✔️ Will my No Claim Bonus lapse if I stop driving?

    No, your No Claim Bonus will remain in place even if you stop driving your insured vehicle. This bonus is only terminated if you fail to renew your policy or in case you make a claim.