If you do not take any claim for your car insurance policy, you are rewarded with No Claim Bonus (NCB). This means you get a discount on the premium of your policy when you renew it. Benefits of NCB range from 20% to 50%.
NCB is a vital feature that can significantly reduce the insurance premium of your vehicle over the years. Every year, the discount that you get goes up by 5% if you do not make any insurance claim on your vehicle.
How does it work?
Take an example. Let us say that your car’s IDV (Insured Declared Value) is ₹ 5,00,000 and your damage premium is ₹ 15,000 for a year. And you haven’t take any claim in the first year, then for the second year’s policy renewal, you are entitled to a 20% discount on the second year’s premium. That means, you will get a discount of ₹ 3,000 and your payable amount would be ₹ 12,000 only.
For the first renewal, you are entitled to get 20% NCB and it increases by 5% every year. However, there is a capping of 50% on NCB.
NCB is terminated in two cases:
- If you take claim in a policy year, you become ineligible for NCB at the time of renewal.
- Eligibility for NCB also gets expires you do not renew the policy within 90 days of its expiration.
Insurance companies have also started offering a rider through which you can pay a minimal amount to protect NCB benefits even when you HAVE taken a claim during the policy term.
Is NCB transferrable?
NCB is transferrable. For instance, you have driven a hatchback for 3 years and haven’t taken any claim. Then you are liable to get NCB benefits while upgrading to a new car.
An NCB certificate is required from the existing insurer for a seamless transfer. However, there are three conditions.
- NCB is transferrable from one vehicle to another if the policyholder is same.
- NCB can be transferred to another insurer at the time of policy renewal only.
- It can be transferred from one insurance company to another as well.
Is NCB applicable to third party insurance?
No Claim Bonus is only offered to insurer’s damage cover. That means that if you only have a third party insurance cover then you not eligible for NCB even if you haven’t taken any claim during the policy term.