No Claim Bonus in Car Insurance: Know More?
No Claim Bonus (NCB) is the reward of the insured to the policyholder for not filing a claim in the policy years. This is a kind of benefit provided by car insurers companies to encourage individuals to drive responsibly on roads, keep the car accident-free, and avoid making claims. It is provided to drivers at the time of renewal of car insurance as a discount on the premium amount.
NCB is a benefit offered to a policyholder by an insurer for having no claims within the policy period. NCB can be accrued over years as a discount on the premiums. The NCB discount on own damage car insurance ranges from 20 percent to 50 percent. NCB can be claimed even if someone sells their vehicle, as it can be transferred to the new vehicle.
Crucial Things to Know about the No Claim Bonus (NCB)
NCB is a rebate on the car insurance premium which can be availed on the car insurance policy ion renewal. NCB as such functions as any other bonus; insurers motivate you to drive responsibly and prevent you from raising claims by providing the NCB with car insurance.
- NCB Amount: The NCB issued by car insurance providers start at 20% (on an annual basis) and then goes up to 50%. You can get an NCB of 20 per cent if you do not make any claims during the 1st year. At the end of 5 years, this accumulates to 50 per cent if there are no claims made by you. The discount from NCB is used to reduce the premium amount paid during the renewal of the car policy
- Avoid Small Claims: The minute you make a claim, the NCB reduces to zero. Therefore, before deciding to make a claim, it is prudent to compare the NCB amount and the claim amount.
- NCB Belongs to the Insured: For owners and not for vehicles, the NCB is applicable. That is, if you purchase a new car after selling a 4-year-old car, you can continue to avail of the NCB, provided you have not made any claim in all those 4 years.
- Change of Insurance Provider/Old Car: You are also eligible for NCB if you change to a new insurance provider. If you have not filed any claim for the previous 4 years and you select a different insurance provider in the 5th year, according to the rules, the new insurer will give you NCB. Besides, if the insured changes his car, the NCB can be easily transferred to the new car.
- Not Allowed in Third-Party Insurance: If you have a car insurance policy that provides cover for personal damages, you could claim NCB. There will not be any NCB if you have a third-party liability policy.
- Stolen/Damaged Vehicle: NCB is not permissible in the event of an accident/damage unless the insured recovers the costs from the other party. Similarly, the insurer will not be able to recover the costs if the car is stolen, and the NCB will be at risk.
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Bottom Line
NCB is very advantageous; you continue to get the advantage of NCB as long as you do not make a claim. However, if you have to claim in a policy year for some purpose, then in the subsequent policy year you cannot avail the advantage of NCB. The NCB would be terminated if you do not renew your current insurance policy within 90 days of the expiry date, and you will no longer enjoy the NCB advantage.
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.
