Importance of No Claim Bonus (NCB) and How to Retain It
Can you imagine getting a reward for not doing anything? Yes, if you do not claim an insurance policy,
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What is No Claim Bonus (NCB)?
Think of a No Claim Bonus as an incentive that you can get for driving safely. Policyholders can get benefits by maintaining a claim-free record. When you do not make a claim in a specific year, you get a set percentage discount at the time of policy renewal.
The percentage increases each year where no claim is made. After making no claims for five consecutive years, the maximum discount which you can avail of as NCB is 50%
How Much Discount Can Be Received With No Claim Bonus?
The No Claim Bonus in car insurance is offered as a percentage. Each year that your record is claim-free, the rate will rise with a preset margin. Here is how NCB works:
| Number of Claim-Free Years (Consecutive) |
NCB Discount Applicable on the Premium |
| One year |
20% |
| Two consecutive years |
25% |
| Three consecutive years |
35% |
| Four consecutive years |
45% |
| Five consecutive years |
50% |
Benefits of No Claim Bonus in Car Insurance
NCB is a reward that comes with several other benefits that are listed below:
- Promotes Safe Driving: To obtain and maintain NCB, you become more careful on the road. The driving habits are directly related to the NCB. Hence, it will motivate you to drive safely.
- Saving on Premiums: As you can get NCB discounts on premiums up to 50%, it greatly helps save money. The overall accumulation thus leads to a considerable reduction in the premium amount that you pay.
- Remains Intact When You Change Vehicle: You can retain your earned NCB even after you have bought a new car. The NCB in car insurance is linked to the owner and not the vehicle itself, so if you purchase a new car, your ongoing NCB will get carried forward.
- Easily Transferable: The NCB you earned by taking all necessary precautions while driving can be transferred even when you switch insurance providers. The NCB percentage will remain intact even when you renew your policy with another insurance provider.
How To Retain NCB in a Car Insurance Policy?
NCB is an invaluable bonus that goes away the moment you make a claim. Hence, it is essential to take the necessary steps to retain your precious NCB, and here is how you can do it:
Avoid Small Claims
Not all damage repairs or replacements require filing claims, especially when the amount for the repair is minimal; it is best to pay it from your end so that the accrued NCB does not get affected. Hence, think twice before you claim.
Get Renewals Done on Time
If your policy is not renewed within 90 days of expiration, you will automatically lose all the accumulated NCB. Therefore, ensuring the renewal is done on time is vital.
Get It Transferred
When buying a new vehicle, you can promptly transfer the NCB to the new car insurance policy. The transfer will ensure that the NCB earned so far remains intact.
Do Not Switch To Third Party Plan
Since NCB is applicable only when you have a comprehensive policy, it can get redundant when you opt for a third-party plan while renewing.
Get the NCB Protect Add-on
No matter how hard you try, there might be certain scenarios where you will be compelled to make a claim in the policy. When you make a claim, the NCB percentage will return to zero. However, taking the NCB protector add-on in your comprehensive policy will ensure that the NCB percentage remains intact even when you file for a claim.
Some Important Facts About NCB
There are some aspects of no claim bonus in car insurance that you must be aware of before you decide if an NCB add-on should be taken or not; let us look at these aspects:
- NCB of 20% starts only after there has been no claim in the first year; hence, it is awarded in the second year. So, NCB cannot be availed in the very first year of the policy period.
- You can transfer the NCB to a new vehicle, but it must only be under your name. You cannot use NCB for two different cars even if the insurance provider is the same.
- The no-claim bonus in car insurance only applies if you opt for a comprehensive or own-damage policy. It is not applicable if you only have a third-party policy.
How Do You Transfer NCB to New Car Insurance?
Follow the steps below to understand how to transfer NCB when you are switching insurers:
- Step 1: Request the existing insurance provider to provide you with an NCB certificate mentioning your accumulated NCB percentage.
- Step 2: Provide necessary documents such as a duly filled NCB transfer application form, a copy of the car insurance, and Forms 29 and 30 (if applicable).
- Step 3: Obtain the NCB certificate
- Step 4: Present the NCB certificate to the new insurance provider. Your NCB will be transferred.
Note: You can switch insurance providers only at the time of renewal.
Conclusion
A no-claim bonus in car insurance is not only a discount, but it also represents that the driver is responsible and mindful when on the road. Once you understand how NCB accumulates and can benefit you financially in the long run, it will help you stay motivated to retain it.
