No claim bonus: Save on your car’s insurance

NCB rewards you for being a responsible driver and car owner, and helps you save on your motor insurance

August 28, 2012 2:31 IST | India Infoline News Service

Do you know you can save on your car’s insurance if you have NCB? The term NCB is the short form for no claim bonus. It is given to the owner of the vehicle—who is also the policy holder—for no claim in the previous policy year. NCB can be accumulated over a period of time (usually five years). If you have NCB you can get a discount ranging from 20%-50% on the own damage (OD) premium. NCB helps you save on your motor insurance. Let’s know more about NCB. 

What is no claim bonus?

No claim bonus (NCB) is the benefit accrued on your car insurance for ‘nil’ claims during the previous policy period. This means if you have insured your vehicle in the previous policy year and have made no claims in that year, then you can avail discount on the OD premium. The percentage of discount on OD premium increases if you don’t make any claims in the consecutive years of insurance. In a way, NCB rewards you for being a responsible driver and car owner, and helps you save on your motor insurance.

According to current norms, NCB ranges from 20% on the OD premium (and not on liability premium) and progressively increases to a maximum of 50% based on successive claim free years. If, however, a claim is filed, NCB is lost in the subsequent policy period.

Save on your car insurance

No claim made or pending in the previous full year of insurance 20% discount on OD premium
No claim made or pending in the previous two consecutive years of insurance 25% discount on OD premium
No claim made or pending in the previous three consecutive years of insurance 35% discount on OD premium
No claim made or pending in the previous four consecutive years of insurance 45% discount on OD premium
No claim made or pending in the previous five consecutive years of insurance 50% discount on OD premium

For example: You renew your car insurance policy, and you have an NCB. On first renewal, your car—worth Rs. 4 lakh—has OD premium of Rs. 12,000. If no claim has been made, you are entitled to 20% discount on your insurance premium which would be Rs. 9,600. You clearly save Rs. 2,400 by not making a claim.

Can I transfer the NCB from an old vehicle to a new vehicle?

Yes, you can transfer NCB from your old vehicle to a new one of the same type (four-wheeler to four-wheeler, two-wheeler to two-wheeler). This way, you can save between 20% and 50% on the first premium payable (when it is the highest) on your new car or two-wheeler.

When you sell your old vehicle ensure that ownership is transferred and make a photocopy of the new entry in the RC (registration certificate) book for insurance purposes. You need to get the NCB certificate. Forward a copy of the delivery note to your insurance company and ask for the NCB certificate or holding letter. This letter is valid for three years.

Will my NCB get transferred if I change my insurer?

Yes, you can avail of the NCB facility if you change the insurer on renewal. You have to produce proof of NCB earned by way of renewal notice from the current insurer. If the same cannot be produced, you may produce your original expiring policy with a certification that no claim has been lodged by you on the expiring policy. Hence, evidence can be in form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer.

Can I transfer my insurance to the purchaser of my vehicle?

Yes, the insurance can be transferred to the buyer of the vehicle, provided the seller informs in writing of such transfer to the insurance company. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance with pro-rata (in proportion) recovery of NCB from the date of transfer till policy expiry.

It may be noted that transfer of ownership in comprehensive/package policies has to be recorded in 14 days from date of transfer failing which no claim will be payable for own damages to the vehicle.

When is NCB terminated?

If a claim is made during the policy year, no NCB will be given in the corresponding next year. If the policy is not renewed in 90 days from date of expiry on your existing policy, then the NCB facility will be lapsed.

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