No Claim Bonus in Car Insurance

No-claim Bonus or NCB is a reward that you can avail on your car insurance premium during renewal. To be eligible for NCB in car insurance, you must make zero claims throughout the policy tenor. The bonus starts at 20% after the first year and keeps increasing for every claim-free year thereafter. However, raising even a single claim during the policy term comes with the risk of losing the NCB.

With your first claim-free year, you can avail a discount of 20% on your comprehensive car insurance premium. This will continue to increase by 5%-10% for every subsequent claim-free year. Moreover, this reward is transferable, even if you buy a new vehicle or change your insurance provider.

You can check the NCB slab offered by the insurer while getting the car insurance policy. The calculation is also available on the policy document as well. It can also be viewed on the portal where you are renewing the car insurance. Moreover, you can also contact your insurance executive or agent to know about your earned NCB.

The NCB in car insurance is applicable upon renewing your comprehensive car insurance policy after a claim-free year. The bonus starts at 20% and can go up to 50% for consecutive claim-free years. Therefore, you can enjoy up to a 50% reduction on your car insurance premium for raising zero claims in the policy term. You can learn how to calculate NCB for car insurance with the table below.

Transferring your old car’s NCB to the new vehicle is quite simple. All you have to do is follow the steps given below:

1. Cancel the old car insurance

2. Upon cancellation, your insurer will send an NCB retention letter

3. Show the NCB retention letter to the new insurer to avail the bonus

The no-claim bonus helps to reduce premiums and has several advantages, which are listed below:

• Discounts and Rewards

For every claim-free year, you get certain rewards and discounts which you can avail during the renewal of the policy. This usually involves paying a lesser premium.

• No-claim Bonus Stays With You

There's no need to worry about losing your NCB. Even if you change your car, your NCB scores will remain to be yours. However, you must renew your policy on a regular basis.

• NCB is Transferable

If you are not satisfied with your current insurer and want to move to another, you can easily transfer your NCB; however, make sure you have opted for the policy before its expiry date. Additionally, this is only applicable for the same type of vehicle.

• More Savings

If you maintain NCB, adhere to the guidelines, and do not file a claim for 5 years continuously, you will be eligible for considerable discounts at the time of renewing your policy.

A comprehensive car insurance policy is indeed a necessity. If you own a luxury vehicle, it is all the more important. However, the premium is higher with availability of broad coverage.

With NCB in car insurance, you get a certain discount on your premium, leading to high savings. Hence, you must have no-claim bonus protection.

Below is the list that contains essential information about NCB in India:

• NCB Termination Rule

You must opt for the NCB add-on before raising the claim. And if you missed renewing your car insurance policy and the grace period (90 days) is also over, you will lose your NCB.

• NCB Proof

Keep the NCB certificate carefully; it is proof from your insurance provider.

• NCB Add-on

If you do not opt for the NCB add-on and file a claim, the NCB is zeroed out.

• Commercial Vehicles and No-claim Bonus

The terms and conditions regarding the NCB differ for a commercial vehicle. Hence, it is important that you read the agreement carefully.

Here are all the possibilities that could terminate your no-claim bonus. 

• Raising a claim during your policy year can terminate your no-claim bonus. You can avoid this by getting a no-claim bonus protection cover. This will keep your NCB benefits active.

• If you allow your policy to relapse, your no-claim bonus will lapse too. The grace period offered by the insurer will keep your policy active, but you will lose your NCB benefits. Hence, it is important to renew your policy before or on time.

Here’s a list of documents you need to transfer your earned NCB:

• Original policy copy and certificate of insurance (also called Form 51)

• Request letter for policy cancellation

• Proof of delivery of the car to the new owner

• Form 29 (notice of transfer of ownership of a motor vehicle)

• Photocopy of the registration certificate book with the name of the new owner

• Form 30 (application for intimation and transfer of ownership of a motor vehicle)

The four documents mentioned towards the end are needed only if you are selling your old car. Even though you can transfer the NCB without selling your old car, most insurance providers demand ownership transfer. However, here’s a way out: a transfer to your spouse or a family member is valid. Moreover, you can apply for an NCB retention certificate within 90 days from the date of sale. This certificate is valid for 3 years.

Here’s how your NCB might or might not be impacted by an accident or burglary. 

• In Case of An Accident

If the damages are the other party’s fault, your NCB will remain fully intact should the insurer be able to recover a majority of the expenditure. With a third-party involved, you might not be able to tell whose fault it may be in certain cases. Hence, the expenses are split into half and your NCB is heavily impacted.

• In Case of Theft

If the insurer is not able to recover the expenditure involved, your no-claim bonus will be affected.