No Claim Bonus vs NCB Protection in Car Insurance: Which is Better?
When it comes to car insurance, there are two important terms that vehicle owners often come across:
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What is a No Claim Bonus in Insurance?
No claim bonus in car insurance refers to a discount on insurance premiums. It is a reward given by insurers to policyholders for not raising any claim. If you drive responsibly throughout your policy period, you become eligible for receiving NCB discount on the own damage (OD) component in your four-wheeler insurance policy. However, if you make any claim during the policy tenure, NCB resets to zero.
Here are the NCB slabs to help you understand how no claim bonus in car insurance is calculated:
| Claim-free Year |
NCB Discount on OD Renewal Premium |
| After 1st claim-free year |
20% |
| After 2 consecutive claim-free years |
25% |
| After 3 consecutive claim-free years |
35% |
| After 4 consecutive claim-free years |
45% |
| After 5 consecutive claim-free years |
50% |
Benefits of No Claim Bonus in Car Insurance
As can be seen in the table above, NCB helps car owners achieve significant savings over the years. Let's learn about the key benefits of no claim bonus in car insurance:
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Discount on Renewal Premium
One of the main advantages of No claim bonus is the discounted premium price at the time of policy renewal. You pay less as compared to the previous-year premium.
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Easily Transferable
Planning to buy a new car? You can transfer your accumulated NCB from the old policy to new car insurance. Moreover, you can also transfer NCB benefits if you want to switch your insurance companies.
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Attached to Policyholders
The no claim bonus in car insurance is given to the policyholders and not the insured vehicle. So, if you want to sell your car in the future, the NCB benefits in your four-wheeler policy will remain intact and not to the new owner of your car.
What is NCB Protection?
The NCB protection is an add-on cover to your comprehensive or own damage car insurance policy. It is a smart option to ensure that all your accumulated NCB over time remains protected, even if you make a claim. Insurers offer the NCB protector as an additional coverage to the base motor policy for an extra premium amount.
Should You Opt for NCB Protection Add-on Cover?
Given the benefits of NCB, you should consider opting for no claim bonus protection add on with your car insurance if:
- You own a car and have valid comprehensive car insurance
- You reside in an area prone to natural disasters
- You have an expensive car that often has a higher insurance premium
Important Things to Know About NCB in Insurance
Now that you know what No claim bonus in car insurance is, let's understand some important things about it:
- NCB applies only to the own damage component of the policy and not the third-party insurance.
- The minimum NCB discount is 20%, which starts from the 2nd year renewal, and reaches the maximum of 50% for 5 consecutive claim-free years.
- You have the option to transfer NCB benefits if you want to change your car insurance company.
- When doing policy renewal, NCB in insurance is an important consideration.
So, NCB or No Claim Bonus Protection: What Should You Choose?
When deciding between No Claim Bonus and NCB Protection, you must understand how both work and their benefits. When you buy car insurance with no claim bonus protector, it helps you save money that you may spend on future premiums. With this add-on, all the NCB you've accumulated for safe driving remains intact even if you raise a claim.
Hence, you will be able to renew car insurance at a discounted premium, depending on the NCB you have earned over time. If you want to get NCB protection, you will need to pay a nominal additional premium. This amount can be around 5% to 10% of your base policy premium, but it will help you save significantly in the long run.
Final Words
NCB in insurance is highly valuable for every car owner because of its numerous benefits. It is important that you understand the policy terms & conditions before you make a final decision regarding four-wheeler insurance. Moreover, you should consider opting for the NCB protection add on cover when buying car insurance, as it can help reduce your premium prices by keeping the no-claim bonus discounts intact.
