No Claim Bonus In Your Motor Insurance Policy – 5 Lesser Known Facts

Motor insurance is an essential requirement for vehicle owners, providing financial protection against accidents and damages. One of the significant benefits of buying a comprehensive insurance policy for your vehicle is the No Claim Bonus (NCB). NCB is a reward offered by insurance providers to policyholders for not making any claims during the policy tenure. While many people are familiar with the basic concept of NCB, there are several lesser-known facts about it that can significantly impact insurance premiums. Let’s begin with understanding the No Claim Bonus meaning and the facts that policyholders ought to know.

Meaning of No Claim Bonus in Car Insurance?

As the name may suggest, NCB or No Claim Bonus is a bonus, incentive, or saving offered by the insurance provider to the policyholder to have not made any claims in the past. It serves as a reward for making no claims during the previous tenure of the policy, possibly by virtue of responsible driving. The NCB is applicable to comprehensive motor insurance policies and can be accumulated over consecutive claim-free years. It can lead to substantial savings on insurance premiums. You may be able to use an online No Claims Bonus calculator to get an idea of the savings your claimless policy history could earn for you. ^## Claims are subject to terms and conditions set forth under motor insurance policy.

NCB Facts and How They Affect Premiums

No Claim Bonus (NCB) is a significant aspect of car insurance that policyholders should understand thoroughly. Here are some important facts about NCB and their implications:

- NCB accumulates over consecutive claim-free years

For every year you don't make a claim on your car insurance policy, you earn a higher NCB percentage. This percentage typically starts at 20% and can go up to a maximum of 50%. The longer you go without filing a claim, the higher your NCB percentage and subsequent saving on your premium. ^##

- NCB is transferable from one vehicle to another

If you sell your car and purchase a new one, you can transfer the accumulated NCB to the new vehicle. This feature allows you to retain the benefits of your claim-free record even when you switch cars. Additionally, if you transfer the ownership of your car along with the insurance policy to another person, the NCB can be transferred to them as well.

- NCB protection add-on safeguards your NCB even after making a claim

Opting for the NCB protection add-on ensures that your NCB remains intact even if you make a claim during the policy term. Without this add-on, filing a claim would result in the loss of your accumulated NCB. This add-on provides peace of mind and protects the saving on your premium, allowing you to maintain the benefits of a claim-free record. ^##

- NCB is forfeited if there is a break in your car insurance policy

A break in policy occurs when you fail to renew your car insurance within the grace period provided by the insurer. In such cases, the accumulated NCB is lost, and when you purchase a new policy, the NCB starts from zero. It is crucial to renew your policy on time to avoid the lapse of your NCB.

- NCB significantly affects the calculation of car insurance premiums

The NCB percentage directly influences the saving offered on your car insurance premium. As the NCB percentage increases with each claim-free year, the saving on your premium also increases. For instance, a policyholder with a 50% NCB is eligible for a 50% saving on the premium, resulting in substantial savings. The higher your NCB percentage, the lower your premium, making it an essential factor to consider when renewing your car insurance policy.^##

- You can retain your NCB even when you switch insurance providers

If you decide to change your car insurance provider, you can transfer your accumulated NCB to the new policy. The new insurer will consider your NCB history and provide the applicable saving on the premium.^## This feature encourages policyholders to compare insurance providers and switch to one that offers better coverage and benefits without losing the NCB they have earned. Claims are subject to terms and conditions set forth under motor insurance policy. NCB is a valuable benefit offered by motor insurance policies. It can reward policyholders for responsible driving and maintaining a claim-free record. You can also save on insurance spending with the No Claims Bonus, meaning, it provides an incentive on insurance premiums, leading to significant savings over time.^## Understanding what the meaning of NCB is as well as some important facts about it, such as the NCB percentage scale, transferability, NCB protection add-on, and the impact on premiums, can help policyholders make informed decisions and maximise the benefits of this feature. By preserving your NCB and accumulating it over the years, you can enjoy lower premiums and enhanced affordability while ensuring comprehensive coverage for your vehicle.

How Does No-Claim Bonus Work?

A No-Claim Bonus (NCB) is a reward given by insurance companies for not making any claims during the policy period. If a policyholder doesn’t file a claim in a year, they become eligible for a discount on their renewal premium. The discount typically ranges from 20% to 50% depending on the number of claim-free years. However, the NCB is forfeited if a claim is made during the policy year.

Features and Benefits of NCB in Car Insurance

The No-Claim Bonus (NCB) offers several advantages for policyholders. Key features include a discount on the premium at the time of renewal for every claim-free year, which leads to significant savings. The NCB increases with each consecutive claim-free year, reaching a maximum of 50%. Additionally, NCB is transferable if you switch insurance providers. This feature ensures that policyholders maintain their benefits even when changing companies. Overall, the NCB encourages safe driving habits and reduces the overall cost of insurance.

How to Calculate No-Claim Bonus?

The No-Claim Bonus (NCB) is calculated based on the number of claim-free years. For example:

1. 1st year: No claims, eligible for 20% discount.
2. 2nd year: No claims, eligible for 25% discount.
3. 3rd year: No claims, eligible for 35% discount.
4. 4th year: No claims, eligible for 45% discount.
5. 5th year: No claims, eligible for 50% discount.

The discount is applied to the own damage premium, not the total policy premium. The NCB is calculated only if the policyholder has not made a claim in the preceding year, and it is valid only for the insured vehicle. Upon renewal, if the vehicle has no claims history, the NCB discount will be reflected in the premium amount.

Documents Required for Transferring NCB in Car Insurance

To transfer your No-Claim Bonus (NCB) to a new insurer or vehicle, you will need to provide the following:

1. NCB certificate from the previous insurer
2. Previous policy details, including policy number and claim history
3. Vehicle registration document
4. Proof of identity and address (if required by the new insurer)

Terms and Conditions of No-Claim Bonus

The No-Claim Bonus (NCB) is subject to the following conditions:

1. NCB is valid only for vehicles without claims in the previous policy year.
2. If you make a claim during the policy period, the NCB may be reduced or revoked.
3. NCB is transferable to a new insurer, but the transfer must be requested when switching policies.
4. NCB benefits are not applicable for third-party liability coverage.
5. The NCB discount applies to own damage premiums only, not the entire policy.

What is a No Claim Bonus Add-On?

An NCB add-on is an optional coverage that protects your No-Claim Bonus in the event of a claim. If you have an NCB add-on, making a claim will not affect your accumulated NCB, allowing you to retain your discount during policy renewal. This add-on is available for an additional premium and can be beneficial for drivers who may need to file a claim but want to preserve their discount.

What Are the Steps to Transfer NCB?

To transfer your No-Claim Bonus (NCB) when changing insurers, follow these steps:

1. Request an NCB certificate from your current insurer.
2. Provide details of your claim-free history.
3. Submit the NCB certificate to your new insurer.
4. Complete the policy transfer process with the new insurer, ensuring your NCB is applied to the premium.

How to Check NCB in Car Insurance

To check your No-Claim Bonus (NCB), you can:

1. Contact your insurer: Request details of your NCB status.
2. Check your previous policy: Review the renewal notice or policy document from your previous insurer.
3. Use the insurer’s online portal: Many insurers allow you to check your NCB status online via their customer portal.

All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply. *Standard T&C apply. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.