No Claim Bonus or NCB in car insurance is a discount granted to a policyholder under the comprehensive car insurance policy. This reward is given by insurance companies when a policyholder does not raise a claim during a policy tenure. This NCB can be used to get a discount during a renewal of his/her car insurance policy.
However, if a policyholder raises a claim during the policy tenure, the NCB will get nullified. To overcome this issue, an NCB Protect add-on can be purchased at an additional premium by the policyholder.
The No Claim Bonus provides several benefits to vehicle owners under a comprehensive car insurance policy. Take a look:
The reward (bonus) a car owner gets from their insurer for not raising any claim in a policy year is referred to as a No Claim Bonus. It accumulates every claim-free year, which leads to a substantial discount on car insurance renewal premium the next year. However, this NCB gets nullified in case a policyholder makes a claim.
To ensure that this bonus isn’t reset because of a necessary claim, an NCB protector cover is required. This add-on cover is optional and protects the NCB even if the insurer has made a claim during the policy year.
The policyholder gets the same slab of per cent in the next year as well.
This discount can be as high as 50%, depending on the number of claim-free years. Usually, a policyholder can save his/her NCB up to 1 claim per policy tenure. Since this is an optional cover, it can only be bought with a comprehensive car insurance policy or a standalone own-damage cover at an additional premium.
It’s important to read the fine print of any motor insurance policy to know what will not be covered. In many cases, this add-on will not be applicable in the following scenarios:
Please note that the extent of coverage and other benefits vary from insurer to insurer. It is important to compare different policies thoroughly before zeroing in on a policy. To get a better idea, don’t forget to compare different policies at Policybazaar.com for the best car insurance NCB protection and deals.
The process of transferring the No Claim Bonus to a new car insurance policy is extremely easy. However, the procedure varies if the car owner plans to buy new car insurance online, offline or through an agent.
In the case of buying new car insurance online, all the car owner needs to do is inform the new insurance company about the correct NCB, the name of his previous motor insurance provider and his old policy number to get his NCB transferred. The insurance company will automatically transfer the NCB from the old insurer to the current car insurance policy.
If the car owner wants to buy new car insurance offline or through an agent, he needs to follow the steps given below to transfer his No Claim Bonus:
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The policyholder needs to submit the following documents to the motor insurance company to get his No Claim Bonus transferred:
NCB helps in reducing annual car insurance premium. Every year, NCB increases by 5% for each claim-free year, which can be utilised as a discount for the subsequent year’s premium. Let’s understand this with an illustration-
On the first renewal, a car with IDV (Insured Declared Value) of Rs. 4 lakhs has own damage premium of Rs. 12,000. The policyholder is entitled to 20% discount if he has not made a claim. Therefore, his renewal premium would be Rs. 9,600, instead of Rs. 12000. He clearly saves Rs. 2,400 by not making a claim.
The money saved on OD (Own Damage) premium keeps increasing yearly with the discount increasing annually. Let’s check how no claim bonus increases every year as per the rule set by IRDA:
Number of Claim-free Years | NCB Percentage |
At the time of 1st claim-free renewal | 20% |
At the time of 2nd claim-free renewal | 25% |
At the time of 3rd claim-free renewal | 35% |
At the time of 4th claim-free renewal | 45% |
At the time of 5th claim-free renewal | 50% |
*OD=Own Damage
NCB will be terminated in either of the situations:
No Claim Bonus is a benefit that is only offered with comprehensive car insurance or Standalone OD cover. It means you can’t avail the NCB discount against your car insurance if you own a third-party cover only. Similarly, it is not applicable to the add-ons as well.
So, at the time of renewing your policy, if you drop an unnecessary add-on cover, it won’t impact your accrued NCB. The only add-on that you can consider is NCB Protector, by opting for which you can protect your NCB benefit, in case of a claim.
The proof of NCB is generally valid for two years. Therefore, if a policyholder is off the road for any reason or doesn’t have his own policy for more than two years, he will have to start from scratch the next time he takes out an insurance cover.
In case of an accident, when you raise a car insurance claim for damages with your insurer, all the NCB earned becomes zero. Irrespective of the amount of claim or the extent of damage, the NCB gets nullified as soon as a claim is raised in a policy year.
The same applies if the vehicle is stolen, as the insurer will be not able to recover its expenses from the other company, and the whole no claims bonus will be at risk.
However, if in any case, you cancel your claim, the nullified NCB will be reciprocated back to your vehicle insurance policy.
By paying an extra premium, the policyholder can protect the accrued No Claim Bonus, even if a claim is made during a policy year. With a No Claim Bonus Protector add-on, one can remain free-minded from losing the NCB benefit.
Probably, this expense will not be exactly the discount accessible after five years of no claims, despite the fact that there may be breaking points regarding how frequently the insurance can be utilized and two claims or more each year may still have an impact. Paying for No Claim Bonus Protection does not keep the cost of the policy from increasing later on.
In case the policyholder changes the insurance provider, the new insurance company allows the exchange of no claim bonus in most cases. In the event of any questions over the qualification of the No Claim Bonus certificate, the new insurer may look for a revelation that the no claim reward is honest to goodness and no claim was registered with the previous insurer by the policyholder.
Checking your No Claim Bonus percentage is quite an easy task. Here is how you can do so from Policybazaar.com:
Alternatively, you can also contact our customer care at 1800-208-8787 to get all the details about your car insurance policy including your NCB per cent.
Ans: Those who are new drivers or want to save money while maintaining their car should buy this cover. It will let the policyholder file up to two claims in a year while keeping their NCB component; resulting in a cheaper car insurance premium on their next renewal.
Ans:Any person who owns a car and a comprehensive car insurance policy can benefit from this add-on. If they're likely to face issues like flooding which may affect their car, buying this add-on will let them raise a claim if needed without affecting their NCB.
Ans: A person is granted NCB as per the IRDAI guidelines and is accumulated under their name. This means that even if they change their insurer or decide to buy a new car then they can claim the NCB received so far.
Ans: This cover can be purchased only with a comprehensive car insurance policy as an optional cover at an extra premium. This can be done either through the insurer’s website or through Policybazaar.com after comparing different policies.
Ans: No. The No Claim Bonus can only be transferred from one car to another car or from one insurance provider to another. You cannot transfer the NCB from your car to your two-wheeler.
Ans: No. An NCB discount is applicable for only one car. If you own more than one car, you will need to get all of them insured under separate car insurance policies and build NCB for each.
Ans: Yes. Motor insurance companies allow you to maintain your No Claim Bonus discount even if you change the type of car. For example, you have been maintaining NCB on your old SUV and now decide to buy a sedan. In this case, the NCB from your old SUV can be transferred to your new sedan despite a change in the kind of car.
Ans: A maximum of 50% of the No Claim Bonus can be availed under a car insurance policy in case of not administering any claims for the previous five consecutive years.
Ans: No. Your No Claim Bonus will remain intact even if you stop driving the insured car. The only way to lose your NCB is by raising a claim or not renewing the policy.
Ans: Yes. Motor Insurance companies cross-check the claim history and check the validity of the NCB at the time of policy renewal. Moreover, they will also verify if the NCB percentage declared by the car owner is correct.
Ans: Yes. You will lose out on your NCB if you cancel your car insurance policy before the policy expiry date. But if you want to change your insurance company, you should get the NCB Certificate issued or declare your correct NCB to the new insurance company in order to not lose out on the bonus.
Ans: If you make a claim under your car insurance policy, you will lose your NCB irrespective of how big or small the claim amount is.
Ans: In the event of raising a claim under your car insurance policy, you lose some or all of your NCB if your insurer has to pay out. The loss per cent depends on how many years NCB you have, as well as on the insurance company.
Ans: In case your NCB becomes zero, you will not be able to get any discount at the time of renewing your car insurance policy.
Ans: IDV and NCB are the two most common terms in car insurance methodology. IDV refers to the Insured Declared Value of the car which is compensated to the policyholder in case the car suffers a total loss. On the other hand, NCB is the reward that is granted to a policyholder whenever he/she does not make a claim in the policy year. This reward can be used to get a discount on the policy premium at the time of car insurance renewal.
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*Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB. Actual time for transaction may vary subject to additional data requirements and operational processes.
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