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      No Claim Bonus (NCB) in Car Insurance

      A no claim bonus is a reward or discount offered by car insurance providers for not claiming during the policy tenure. This reward can be accumulated for 5 years to get up to a 50% discount on the renewal premium. In the article, we will explain NCB in car insurance in detail.

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      What is NCB in Car Insurance?

      When you don’t raise a car insurance claim during a policy year, your insurance companies offer you a reward for that. This reward is termed as No Claim Bonus. Thus, NCB is like a discount you get for not raising a claim during a policy term.

      Apart from this, your earned NCB discount gets accumulated every year until you don’t raise a claim. You can use this reward to get a discount from 20% to 50% when you renew your car insurance next year.

      Benefits of No Claim Bonus in Car Insurance

      Apart from being a reward for not raising a claim, the NCB offers a few more benefits to the policyholders. These benefits are:

      • Lower Premiums - You can reduce your car insurance premium by using your No Claim Bonus reward. Your insurance company offers a discount that starts at 20% and goes up to 50%. This discount can reduce your premium when renewing your motor insurance policy.
      • Reward for Good Drivers - NCB is a reward your insurer gives for being a good driver and not raising a claim. You can continue to take advantage of this reward by not getting involved in accidents and not raising a claim.
      • Easily Transferable - A No Claim Bonus is given to the insured car, not the policyholder. Thus, it can be easily transferred when you change your vehicle or insurer. So you can take advantage of this reward till you drive and renew your policy.
      • Great Savings - The earned NCB percentage will increase if you haven’t raised a claim. Those who don't raise any claims for five consecutive years can get a sizable discount on their premiums, thus receiving great savings on their renewal premium.

      How to Calculate NCB for Car Insurance?

      The insurer starts granting an NCB reward on the Own Damage premium during the first renewal of the policy. This reward increases by 5% yearly until you don't raise a claim.

      However, once you raise a claim, this NCB gets nullified and becomes zero.

      Here is a table stating the percentage of NCB reward offered for each claim-free year.

      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%

      Now, let’s understand how the No Claim Bonus is calculated with a simple example-

      On the first renewal, a car with an IDV (Insured Declared Value) of Rs. 4 lakh has an own damage premium of Rs. 12,000. The policyholder did not make a claim and received an NCB of 20% for the first year. If he uses this reward on the upcoming renewal, his premium will be:

      Premium Calculation Mr. A
      Premium for the first year Rs. 12,000
      Premium for the second year (after receiving NCB discount of 20%) Rs. 9,400
      Savings on Premium Rs. 2,400

      As per the table above, the money saved on the OD (Own Damage) premium keeps increasing yearly, with the discount increasing annually until there are zero claims. You can also use an NCB calculator to calculate the NCB percent for your insured vehicle.

      How to Transfer NCB to New Car?

      The best part about the No Claim Bonus is that it can be transferred to a new car and a new insurer. As this reward is granted to the insured car and not the policyholder, it can be transferred when you buy a new car or change your insurer. It cannot be transferred to a new car owner.

      So, an NCB can easily be transferred in two scenarios:

      • If you are planning to buy a new car, you can transfer NCB to your new vehicle
      • If you are looking to switch your insurance provider at the time of car insurance renewal

      If buying new car insurance online, you must inform the new insurer about the correct NCB, the name of your previous motor insurance provider and your old policy number to get your NCB transferred. The insurance company automatically transfers the NCB from the old insurer to the current car insurance policy.

      Here is how you can transfer your No Claim Bonus offline:

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

      Documents Required for NCB Transfer

      The following documents are required to transfer NCB offline:

      • 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)
      • No claim bonus certificate

      Can No Claim Bonus Get Cancelled/Terminated?

      Yes, there are a few scenarios under which a No Claim Bonus can get cancelled. These are:

      • If you raise a car insurance claim during a policy year, your earned NCB will be nullified and become zero. In such a scenario, no NCB will be given in the next year.
      • Your no claim bonus will also get terminated if the vehicle insurance policy is not renewed within 90 days from the expiry date of the existing policy. The grace period for car insurance renewal is 90 days. If you fail to renew your policy before

      Can NCB be Protected even After a Claim?

      A No Claim Bonus reward applies only until you do not raise a claim in the policy year. Any NCB earned will become null and reset to zero as soon as you make a claim.

      To overcome this, insurers offer an NCB Protect add-on that allows you to retain your earned NCB reward even if you raise a claim during the policy year.

      This add-on comes at an extra premium and can be purchased with a comprehensive car insurance policy.

      What is IDV and NCB in Car Insurance?

      IDV and NCB are the two most common terms in car insurance methodology. IDV refers to the Insured Declared Value (market value - depreciation) of the car, which is compensated to the policyholder if the vehicle suffers a total loss. An IDV can be known by using an IDV calculator.

      On the other hand, NCB is the reward granted to a policyholder whenever he/she does not 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.

      FAQs on No Claim Bonus

      • Q1. How can I get my NCB certificate?

        Ans: To get an NCB certificate, you can contact the previous insurer and request an NCB certificate. The insurer will analyse your policy details and issue an NCB certificate.

      • Q2. Is it a good idea to get an NCB Protection Cover?

        Ans: New drivers who 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 intact, resulting in a cheaper car insurance premium on their next renewal.

      • Q3. 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 car, you will need to get all of them insured under separate car insurance policies and build NCB for each.

      • Q4. 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 have now decided 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.

      • Q5. What is the maximum percentage of NCB available under car insurance?

        Ans: A maximum of 50% of the No Claim Bonus can be availed under a car insurance policy if no claims have been administered for the previous five consecutive years.

      • Q6. Do car insurance companies verify the claim history and check the NCB?

        Ans: Yes. Motor insurance companies cross-check the claim history and 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.

      • Q7. Do I lose my NCB if I cancel insurance?

        Ans: Yes. You will lose 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 so you do not lose the bonus.

      • Q8. How will a claim impact my NCB?

        Ans: If you claim under your car insurance policy, you will lose your NCB regardless of the amount of the claim.

      • Q9. What if NCB is zero?

        Ans: If your NCB becomes zero, you cannot get a discount when renewing your car insurance policy.

      • Q10. How to check NCB in car insurance?

        Ans: You can check the NCB details of your policy from the insurer’s official website. Simply log into your account, and all your policy details, along with its NCB, will be displayed. If you are a Policybazaar customer, you can check your NCB from your account dashboard on Policybazaar.com.

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      #Rs 2094/- per annum is the price for third-party motor insurance for private cars (non-commercial) of not more than 1000cc

      *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.

      ##Claim Assurance Program: Pick-up and drop facility available in 1400+ select network garages. On-ground workshop team available in select workshops. Repair warranty on parts at the sole discretion of insurance companies. Dedicated Claims Manager. 24x7 Claim Assistance.

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