There are several misconceptions revolving around NCB and its eligibility, particularly when it comes to selling a vehicle or purchasing a new one.
NCB is a benefit provided to all car insurance policyholders as a reward for driving safely under their motor insurance policy. Here the policyholder qualifies for a discount on his/her 4-wheeler insurance policy’s premium if no claim(s) are raised in the previous policy year.
NCB discount is awarded for the subsequent years during policy renewal, and it can be accumulated over a period of time. Moreover, the best thing about NCB is that it is tied to the policyholder and not to the four-wheeler. Therefore, it can be transferred in favour of the current vehicle owner, and he/she can use this bonus when buying an insurance coverage for a new vehicle in the same category.
In India, it is mandatory to have third-party motor insurance for driving your car. However, it only provides coverage against third-party damages. There is no coverage for own damages.
To cover the damages caused to your own car in case of an accident, you must have a comprehensive car insurance policy. It covers the damages sustained to your own car as well as the third-party liabilities.
The insurance premium for comprehensive insurance is higher than third-party liability cover. So, you can avail the benefit of the NCB discount on your previously sold car to considerably reduce the insurance premium.
Here is a table showing the discount percentage according to the number of claim-free years-
|Number of claim-free years||Discount percentage on Own Damage Premium|
|No claim made during the first year||20%|
|No claim made during two consecutive policy years||25%|
|No claim made during three consecutive policy years||35%|
|No claim made during four consecutive policy years||45%|
|No claim made during five consecutive policy years||50%|
As you know, the NCB is a discount given to the policyholder and not to the car. Therefore, as a policyholder, you can easily retain your accumulated bonus even after selling the old car or switching your insurer at the time of policy renewal.
Here are the steps mentioned to transfer your NCB from the old car to the new car-
While selling your old car, make sure you have a valid sales invoice and the sales deed of the car. Along with it, submit RTO forms 29 and 30. Do not forget to keep the copies of the submitted forms with you.
To get the NCB certificate, you need to inform your existing insurance provider regarding the sale of your car. Also, you need to apply for a transfer of NCB along with the above the mentioned documents. Then your insurer will issue the NCB certificate with a validity of three years.
The NCB certificate is valid for up to three years. It can be transferred to the new vehicle policy anytime within this stipulated time frame.
You can easily transfer your NCB by submitting the NCB certificate to the insurer of your new car. However, public insurers might ask for the sale proof document and a copy of the transferred RC with your NCB certificate.
Once you are done with the above-mentioned procedure, the NCB will be transferred to your new 4-wheeler insurance plan.
If the policyholder switches to a different insurance service provider, the new insurer usually permits the transfer of the No Claim Bonus.
In case of doubts or queries regarding the validity/eligibility of the NCB certificate, the new insurer could ask for a declaration from the previous insurance provider that the NCB is indeed genuine and that the policyholder did not previously make any claim from them.
Your NCB may be denied if-
If the policyholder’s car gets damaged, he/she must get an estimate for the repairs. If the NCB amount you stand to forfeit in the forthcoming year exceeds this estimate, it makes sense not to raise a claim and instead pay for the damage out of your pocket.
In any case, damage repairing amount is lesser than your accumulated bonus is usually not advisable.
NCB is a reward given to policyholders for not making any claims in the previous years. However, even a small claim can cancel the entire bonus, making it zero.
However, motor insurance companies give their customers the option to select an NCB add-on cover, which protects the no claim bonus up to a specific limit. By taking this add-on cover, the policyholder can make an NCB claim even if a claim(s) has been made in the previous year, up to a specified pre-determined limit.
Therefore, it is advised to check the predetermined limit before buying this add-on cover with your basic car insurance.
If you hold your NCB for a long period, certainly for five years, it significantly lowers your insurance premium even on your newly purchased vehicle. Also, you should avoid raising claims for small damages caused to the insured car, so you can enjoy this benefit.
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