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.
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
By avoiding claims, you demonstrate responsibility, which insurers value.
Each claim-free year increases the discount, potentially saving a good amount on your premiums over time.
The no-claim bonus offers several advantages that directly impact your premium costs. Let’s break them down.
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% |
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.
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.
While NCB is a valuable benefit, knowing what can lead to its loss is essential. Here are some common pitfalls:
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.
If your car insurance policy lapses and you fail to renew it within the grace period, your accumulated NCB will reset.
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.
While switching insurers or vehicles, failing to transfer your NCB can result in losing this benefit.
To transfer your no-claim bonus (NCB) to a new insurer or vehicle, you’ll need to submit the following documents:
A copy of the delivery note received from the sale of your old car.
A copy of the insurance policy for the old car.
A copy of the booking form was received while purchasing the new car.
A duly filled transfer application.
Forms 29 and 30 document the agreement between buyer and seller.
A copy of the transferred RC if the old car is sold.
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.
The no-claim bonus (NCB) comes with specific conditions
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.
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.
Transferring your no-claim bonus (NCB) from your old car to a new one is straightforward. It includes the following steps:
To begin, contact your insurance provider and request an NCB transfer.
After submitting your request, your insurer will verify the details and issue your NCB certificate.
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.
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