No Claim Bonus (NCB) in Car Insurance

What is No Claim Bonus in Car Insurance?

No Claim Bonus or NCB in car insurance is a reward given to policyholders by insurance companies for not raising any claims during the policy tenure. The NCB not only promotes safe driving, but also offers up to 50% discounts during car insurance renewal.

The NCB reduces your own damage premium and you can accumulate it for consecutive claim-free years. This discount is not applicable on third-party insurance plans and only stays intact if you do not raise a single claim during the previous policy tenure.

How Does NCB in Car Insurance Work?

The NCB in insurance comes into effect after every claim-free year. Car insurance companies offer between 20 to 50% discount on your policy premium at the time of renewal. It starts from 20% on your second consecutive year of not filing a claim. Your accumulated NCB will also remain intact if you are not at fault for any damages incurred and the other party's motor insurance policy covers the damages. Additionally, if your car insurance claim is rejected, your NCB will not be affected. However, the NCB becomes zero when you raise a claim. Simply put, you will only lose your no claim bonus if the insured vehicle is stolen or both parties are at fault and the insurer settles the claim.

How to Calculate NCB for Car Insurance?

You can calculate NCB with the first renewal of your comprehensive car insurance. Insurers offer a 20% discount for the first claim-free year and increase it by 5-10% for every consecutive year of no claims. The following table shows how to calculate NCB in motor insurance as per the number of claim-free years:

For example, the own damage premium for your 1st year car insurance is Rs. 22,000 and you do not raise any claims, your car insurance renewal premium for the 2nd year will be as follows:

Benefits of NCB in Car Insurance

No claim bonus in car insurance offers these benefits to the policyholders:

• Renewal Discounts: The no claim bonus offers discounts on premiums while renewing your car insurance. With NCB, vehicle owners can save up to 50% on their own damage premium after 5 consecutive claim-free years.
• Transferable: Since the no claim bonus is linked to the policyholder and not the insured car, you can easily transfer NCB when buying a new car insurance or switching your insurer.
• Promotes Safe Driving: Car insurance companies encourage safe and responsible driving by offering NCB in car insurance.

Key Facts about No Claim Bonus in Car Insurance

Here are a few things you must know about the NCB in car insurance:

• The NCB starts at 20% and can only go up to a maximum of 50% as per the consecutive claim-free years.
• NCB discount is only applicable to the own-damage premium component and does not reduce your third-party insurance premium.
• The NCB is transferable only if the owner stays the same while changing the car or the insurer. You cannot transfer the NCB if you sell the car. While switching the insurer, your existing insurance company will also have to provide proof of your accumulated NCB.

How to Transfer NCB in Car Insurance?

You can easily transfer NCB to your new car insurance using the steps mentioned below:

• While renewing your car insurance online, share your previous policy number, correct NCB, and the previous insurer's name with your new insurance provider.
• The insurer will transfer your existing no claim bonus to your new policy, and you can continue enjoying the same benefits.
• For an offline NCB transfer, simply contact your old insurer and submit the required documents. Your old insurer will provide you with an NCB certificate, which you need to present to the new insurer for the NCB transfer.

Documents Required for NCB Transfer

To transfer your no claim bonus when switching insurers or buying a new car, have these documents handy:

• NCB transfer application form
• Copy of the car insurance policy
• 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) and the booking receipt (in case of buying a new vehicle)
• NCB certificate from the previous insurer

How to Protect NCB in Car Insurance?

You lose your NCB as soon as you file a car insurance claim. However, there is a way to protect your accumulated no claim bonus. While purchasing a comprehensive or an own damage policy, you can opt for the NCB protector add-on at an additional premium.

This add-on allows you to save your NCB discount even if you raise a claim in the policy year. The number of claims you can make with the NCB protector add on varies from insurer to insurer.

Apart from purchasing the add-on, you can also use the following tips to protect your NCB:

• Drive Responsibly: The easiest way to protect your NCB is by driving safely and responsibly to avoid any collisions and road accidents.
• Avoid Filing Small Claims: Try to avoid filing a claim for minor damages, such as small scratches, minor bumps, etc., to keep your NCB intact.
• Renew Car Insurance Timely: A break in your policy can also terminate your NCB completely. Hence, it is important to renew your car insurance timely.