No Claim Bonus (NCB) in Car Insurance

What is NCB in Car Insurance?

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.

Benefits of NCB in Car Insurance

The No Claim Bonus provides several benefits to vehicle owners under a comprehensive car insurance policy. Take a look:

• Lower Premium - The reward consists of a discount on the car insurance premium that can be applied at the time of car policy renewal next year. For every claim-free year, the NCB discount percentage is granted to the policyholder. This discount can be used to reduce the premium amount that he is supposed to pay at the time of renewing his car insurance.
• Earn Rewards - No Claim Bonus is considered proof of being a responsible driver and maintaining the good condition of the insured car. Thus, the policyholder can earn rewards in the form of NCB by not making any claims during his previous policy tenure.
• Granted to Policyholders - A big takeaway from NCB is that it is granted to the policyholder/ car owner and not the car. Therefore, whether he buys a new car or sell his insured car, the NCB remains with him as long as he is renewing car insurance policies. It cannot be transferred to the new owner of the car.
• Transferable to Another Car/ Insurer - The No Claim Bonus can be easily transferred to another car if the policyholder changes his car. Moreover, it can also be transferred from one insurer to another if the car owner decides to buy insurance from another motor insurance company. The policyholder will require an NCB Certificate from his/her previous insurer to get the NCB transferred.
• Higher Savings: The NCB percentage will increase by following all the rules. Those who don't raise any claims for five consecutive years can get a sizable discount of up to 50% on their premium on their policy renewal.

What is NCB Protector in Car Insurance?

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.

When is NCB Protector Cover Not Applicable?

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:

• Exceeding the number of claims allowed under the NCB Protector add-on will make the insured ineligible for the no-claim bonus
• The car policy must be renewed within 90 days of the expiry or as stipulated, else the NCB will drop to 0%
• Mid-term inclusion or removal of the NCB protector is not allowed by most insurers
• The vehicle must be repaired in a network/ authorized garage in order to avail the benefits of this add-on 
• The NCB will be cancelled in case any fraudulent OD claims have been made or any misrepresentation of facts regarding a claim have been made.

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.

How to Transfer NCB to New Car Insurance?

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:

• Contact your old motor insurance provider
• Request for NCB transfer and submit all the required documents
• The previous insurance company will issue the No Claim Bonus Certificate
• Submit the NCB Certificate to the new insurance company
• The new insurance insurer will transfer the NCB to the new insurer or newly purchased car.

Documents Required for Transferring NCB

The policyholder needs to submit the following documents to the motor insurance company to get his No Claim Bonus transferred:

• Transfer application
• Photocopy of the car insurance
• Buyer-seller agreement (Forms 29 & 30)
• Copy of transferring old registration certificate/ ownership transfer certificate (in case of sale of old car)
• Copy of delivery note (in case of sale of old car)
• Copy of the booking receipt (in case of buying a new car)
• NCB certificate

How to Calculate NCB for Car Insurance?

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-

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:

*OD=Own Damage

When is NCB Terminated?

NCB will be terminated in either of the situations:

• If a claim is made during a policy year, no NCB will be given in the next year.
• If the policy is not renewed within 90 days from the date of expiry of the existing policy, the No Claim Bonus will terminate

More Facts About NCB

• NCB can be transferred from one vehicle to another as long as the policyholder is the same
• NCB is transferable from one insurer to another at the time of renewal
• An NCB Certificate from the existing insurer will be required in order to transfer the NCB
• NCB does not impact the cost of Roadside Assistance. Thus, if you make a claim under Roadside Assistance Cover, it will not have an impact on your No Claim Bonus reward.

NCB is Not Applicable to Third Party Insurance

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.

Validity of Proof of NCB

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.

NCB if the Vehicle is in an Accident or Stolen

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.

Can NCB be Protected?

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.

Can NCB be Transferred to a Different Insurer

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.

How to Check NCB in Car Insurance?

Checking your No Claim Bonus percentage is quite an easy task. Here is how you can do so from Policybazaar.com:

• Head to the official website of Policybazaar Insurance Brokers Private Limited
• Sign-in to your Policybazaar account using your mobile number and OTP
• Once signed in you will be taken to your policy dashboard
• Here you will be able to find all the details regarding your NCB discount under the ‘Policies’ tab.

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.