The no-claim bonus (NCB) is a significant factor that directly affects your car insurance premium and plays a vital role in determining the overall cost of your policy. Understanding how NCB works is essential, as it can help you save more on your premiums. Let’s delve into what NCB is and why it is important.
What is NCB in Car Insurance?
NCB in car insurance stands for no-claim bonus. When you don’t submit a claim during your policy year, your insurer gives you the benefit of a reduced amount on premium when you renew the insurance during the next policy year.
Here’s how NCB in car insurance works
● Reward for Safe Driving
By avoiding claims, you demonstrate responsibility, which insurers value.
● Discounted Premiums
Each claim-free year increases the discount, potentially saving a good amount on your premiums over time.
Benefits of NCB in Reducing Car Insurance Premiums
The no-claim bonus offers several advantages that directly impact your premium costs. Let’s break them down.
1. Substantial Savings on Premiums
The most obvious benefit is reducing the standalone Own Damage (OD) component of your car insurance premium. Here’s a glimpse of how NCB percentages typically stack up:
| Claim-free Years | NCB Percentage Discount |
| 1 Year | 20% |
| 2 Years | 25% |
| 3 Years | 35% |
| 4 Years | 45% |
| 5+ Years | 50% |
2. Transferable Benefit
If you decide to sell your car and buy a new one, the NCB can be passed on to the new vehicle’s insurance policy. This ensures you don’t lose your accumulated benefits.
3. Protection with Add-ons
You can protect your NCB by opting for an NCB Protection Add-on. This ensures your bonus remains intact even if you claim during the policy year.
Factors Leading to Loss of NCB in Car Insurance
While NCB is a valuable benefit, knowing what can lead to its loss is essential. Here are some common pitfalls:
1. Filing Claims
Even a single claim during the policy year can wipe out your NCB. Be mindful of this when deciding whether to file for minor damages.
2. Policy Lapses
If your car insurance policy lapses and you fail to renew it within the grace period, your accumulated NCB will reset.
3. Unreported Vehicle Usage Changes
If you start using your car for purposes other than those declared in your policy (e.g., switching from personal to commercial use) without informing your insurer, your NCB will become invalid.
4. Not Transferring NCB
While switching insurers or vehicles, failing to transfer your NCB can result in losing this benefit.
Documents Required for Transferring NCB in Car Insurance
To transfer your no-claim bonus (NCB) to a new insurer or vehicle, you’ll need to submit the following documents:
1. Delivery Note
A copy of the delivery note received from the sale of your old car.
2. Old Insurance Policy
A copy of the insurance policy for the old car.
3. Booking Form
A copy of the booking form was received while purchasing the new car.
4. Transfer Application
A duly filled transfer application.
5. Buyer-Seller Agreement
Forms 29 and 30 document the agreement between buyer and seller.
6. RC Transfer Copy
A copy of the transferred RC if the old car is sold.
7. NCB Certificate
The No Claim Bonus certificate issued by your insurer.
Once you submit these documents, the NCB will be transferred to your new car. With the existing NCB certificate, you can enjoy a discount on the insurance premium for your new vehicle.
Terms and Conditions of NCB in Car Insurance
The no-claim bonus (NCB) comes with specific conditions
- If a claim is filed, the NCB may be reduced or cancelled.
- NCB benefits do not extend to third-party liability coverage.
- Discounts from NCB apply only to the premium amount at the time of renewal, not the full policy.
No-claim Bonus (NCB) Under Different Scenarios
1. No-claim Bonus in Accident Cases
If your car is involved in an accident, you forfeit the entire no-claim bonus (NCB), regardless of the claim amount or the expenses the insurer covers. However, if the accident was caused by a third party and the insurer recovers some of the costs, a part of the NCB might remain intact.
2. No-claim Bonus in Case of Vehicle Theft
The NCB is typically lost when the car is stolen. However, the no-claim bonus can be preserved if the vehicle owner chooses not to file a claim.
How to Transfer Your NCB When Buying a New Car
Transferring your no-claim bonus (NCB) from your old car to a new one is straightforward. It includes the following steps:
1. Submit an NCB Transfer Request
To begin, contact your insurance provider and request an NCB transfer.
2. Obtain Your NCB Certificate
After submitting your request, your insurer will verify the details and issue your NCB certificate.
3. Apply for a New Insurance Policy
Once you’ve purchased a policy for your new car, share the NCB certificate with your insurer. After verification, the no-claim bonus will be transferred to your new policy, reducing your premium.
NCB in car insurance rewards safe driving and helps lower your premiums over time. You can enjoy more affordable coverage by focusing on maintaining a claim-free record. So, drive safely and make the most of your NCB benefits.
Source: Cosmo Politian
