No Claim Bonus (NCB) in Car Insurance

No Claim Bonus is an add-on cover that is available under the comprehensive car insurance policy. It secures policyholders’ accumulated NCB percentage in case an Own Damage (OD) claim is made. Without this cover, if even one claim is made during the policy year, then the accumulated bonus percentage will be reset to zero.

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NCB Full Form in Car Insurance

No Claim Bonus refers to a reward granted to the insured car owners by motor insurance companies if they do not register any claim during the policy tenure. The reward consists of a discount on the car insurance premium that can be applied at the time of policy renewal next year.

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 No Claim Bonus helps a policyholder to earn at least 20% and upto 50% discount on his car insurance premium. 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 as proof of being a responsible driver and maintaining a 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 upto 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 term, which leads to a substantial discount on its policy's renewal premium.

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 percent in the next year as well. For instance, he/she did not make a claim the previous year and received a 25% NCB. This same discount will be transferred to his/her renewed policy 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 upto 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:

  • Exceeding the number of claims allowed under the NCB Protector add-on will make the insured ineligible for the no claim bonus
  • The 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
  • 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 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 case of buying new car insurance online, all the car owner needs to do is inform the new insurance company about the correct NCB, 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 the 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 does NCB Work?

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 subsequent year’s premium. Let’s understand this with an illustration-

Illustration

On 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 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 every year 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

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.

More 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.

NCB for Commercial Vehicles

Business plans and fleet vehicles don't generally give you a chance to develop NCB, but some insurers may consider your experience of driving a commercial car while figuring your premium.

If you have insured your car for "social, residential and delight" purposes, and in addition to work, you presumably can build NCB.

NCB is Not Applicable to Third Party Insurance

No Claim Bonus is a benefit that is only offered with the Own Damage 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 don’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, unless the insurer recovers the majority of its expenses from the other party, for example, the driver who might be at fault, then a bit of or the entire no claims bonus will be lost. If the event involves a third party and the fault of the driver cannot be determined, then the expenses will be divided into two, and the no claims bonus will be affected.

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 no claims bonus will be at risk.

Can NCB be Protected?

By paying an extra premium, the policyholder can protect the accrued No Claim Bonus, even if a claim is made. With No Claim Bonus Protector, 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.

Mirrored No Claims Bonus

The term mirrored no-claim bonus is used when an individual who has already gained a bonus on an existing car insurance policy, now decides to purchase a vehicle for commercial purposes.

NCB if Insurance is Shifted 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 percent 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 at 1800-208-8787 to get all the details about your car insurance policy including your NCB per cent.

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FAQs

  • Q1. Is it a good idea to get an NCB Protection Cover?

    Ans. Those who are new drivers or want to save money while maintaining their car should buy this cover. It will let the insured file up to two claims in a year while keeping their NCB component; resulting in a cheaper car insurance premium on their next renewal.

  • Q2. Who should buy a No Claim Bonus Protector?

    Ans. Any person who owns a car and policy to buy a comprehensive car insurance policy can benefit from this policy. 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.

  • Q3. Is NCB transferable?

    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.

  • Q4. How can I buy an NCB protector cover?

    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.

  • Q5. Can I transfer my NCB from a car to a two wheeler or motorcycle?

    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.
  • Q6. Can one No Claim Bonus cover multiple cars?

    Ans: No. An NCB discount is applicable for only one car. If you own more than one cars, you will need to get all of them insured under separate car insurance policies and build NCB for each of them.
  • Q7. Is NCB available even if I change the type of car?

    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 kinds of car.
  • Q8. What is the maximum percentage of NCB available under car insurance?

    Ans: A maximum of 50% of No Claim Bonus can be availed under a car insurance policy in case of not administering any claims for the previous five consecutive years.
  • Q9. Will I lose my NCB if I stop driving?

    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.
  • Q10. Do insurance companies verify the claim history and check the NCB?

    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.
  • Q11. Will I lose my NCB if cancel my policy before expiry?

    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.
  • Q12. How will a claim impact my NCB?

    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.

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