Everything About No Claim Bonus In Car Insurance
Updated On Oct 15, 2023
While prices are generally rising, car insurance offers a unique proposition in that premiums can actually decrease year after year thanks to the No-Claim Bonus. Most policyholders are aware of the general concept of NCB, but many are unaware of the nuances, resulting in disappointment at policy renewal.
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- Everything about No Claim Bonus in Car Insurance
In the case of car insurance, the No Claim Bonus is the insurer's compensation to the policyholder for not filing a claim in the previous years. That is, NCB – a 20-50 percent discount on premium payable – cannot be asserted as a right; instead, it must be won by maintaining a claim-free record.
Everything about No Claim Bonus in Car Insurance
Here are a few things that you should know about NCB in Car insurance:
NCB Is A Discount That Is Only Available When You Renew Your Policy
Since you have no claim-free background when you purchase your first comprehensive car insurance policy, you are usually ineligible for any NCB discount on the premium charged (except in the unusual case of NCB transfer). When you renew your policy for the first time, you will get a 20% NCB if you haven't made a claim in the previous year. This discount grows gradually with each claim-free year, reaching a limit of 50% after five claim-free years.
NCB Belongs To You, Not Your Car
NCB is unique in that it is linked to the policyholder rather than the vehicle. As a result, whether you replace your current car with a new one or turn to a different insurer at the time of renewal, you can keep your NCB. A person-to-person transfer is not permitted, except to the legal heir in the event that the policyholder's car is inherited by him or her after the policyholder's death.
Transfer of NCB
When you sell your old car and buy a new one, you must follow a simple process to complete this move.you must send forms 29, 30 (buyer-seller agreement form) and a letter demanding the transfer of NCB to your new insurer. However, if you purchase the policy online, you won't need to request the certificate because your NCB will be transferred based on your declaration. However, since your new insurer will cross-verify some details with your previous insurer, this does not mean you can suppress any prior claims in order to get NCB.
There Is No NCB For Third-Party Insurance.
Remember that the NCB discount only applies to the own harm portion of the premium, not the third-party liability portion, which accounts for 15-20% of the overall premium. As a result, NCB is not eligible for third-party auto insurance. If you only have third-party auto insurance, for example, no NCB is won regardless of how many years the policy has been extended or whether any claims have been made.
Keeping your NCB secure
You can avoid the problem of having to choose between claims and NCB by purchasing an NCB protected add-on cover along with your base insurance policy, which protects your NCB even if you file a claim, subject to certain limitations.
Small claims can lead to larger losses
Although it might be tempting to file a claim, any time your car sustains minor damage, it is wise to do so after conducting a cost-benefit analysis. “This is because, except with a minor argument, NCB reverts to zero. By avoiding minor claims, you could save a lot of money as a direct discount on the following year's premium because of NCB.
NCB Can Go Up To 50% of OD Premium
No Claim Bonus is an accumulative bonus which keeps increasing with every claim free year. It can go up to 50% of the own-damage premium in consecutive 5 years.
The number of cars in India is rapidly growing. However, before you buy a car in India, you should be aware that car insurance is mandatory in India, and you must purchase it at the time of purchase. The good news is that most insurance firms offer NCB benefits to policyholders.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.