What is No Claim Bonus (NCB) in a car insurance policy?

What is No Claim Bonus (NCB) in a car insurance policy?

Understand how No Claim Bonus works, its benefits and terms and conditions

3 mins
01 Feb 2023

With each passing year, the premium amount you need to pay for purchasing insurance plans tends to appreciate. However, with No Claim Bonus, popularly known as NCB, you can significantly reduce the premium you pay while renewing your car insurance policy.

How does the No Claim Bonus work?

No Claim Bonus or NCB comes into effect when you don’t raise a claim against your motor insurance policy for the entirety of the policy term. In the case of motor insurance policies, an individual with a claim-free record can get up to 20% to 50% discount on premium amounts in the form of NCB.

While opting for a comprehensive car insurance policy, you cannot get an NCB unless you opt for an NCB transfer. As per the basic norm, you will be eligible for a No Claim Bonus starting from 20% after renewing an insurance policy for the first time. This scenario is only applicable if you have not raised any claims in the previous years. Further, the rate of discount will increase with each claim-free year by up to 50% at the end of five claim-free years.

Benefits of No Claim Bonus in car insurance

Here are the benefits of a No Claim Bonus in a car insurance policy:

  • Affordable premiums

    With no claims in the previous year, you are rewarded with NCB via which you can save up to 20% to 50% on your car insurance premiums during the first renewal.

  • Earn rewards for maintaining your car properly

    The NCB can be used as evidence to prove that you have driven and maintained your insured vehicle properly. Hence, you can earn several rewards by not filing a claim in previous years.

  • Granted directly to the policyholders

    The NCB is granted directly to the policyholder and not his/her insured vehicle. Hence, if an individual decides to sell off the vehicle, the NCB remains with him till the time of his car insurance renewal. However, it is important to note that the accumulated rewards cannot be transferred to a new owner.

  • Transferable to another insurer or car

    In case the policyholder decides to buy a new car, the NCB form will transfer the bonus amount to the new vehicle. Further, policyholders can choose to transfer the NCB benefits to a new insurance provider if he/she wishes to purchase motor insurance from a new company.

How to transfer NCB to a new car insurance policy?

The process of transferring an NCB to a new car insurance policy is simple. However, the procedure tends to differ if an individual wishes to opt for a transfer online, offline or through an agent.

In case a policyholder wants to opt for an NCB transfer online, he/she will need to inform the new insurance provider about the exact NCB, name of the former motor insurance company and last policy number. Following this, the new provider will transfer the NCB to the current insurance plan.

That said, here are the steps to opt for an NCB transfer offline or via an agent:

Step 1: Get in touch with the former motor insurance company.

Step 2: Make an NCB transfer request and produce all necessary documents.

Step 3: Following this, the company will provide an NCB certificate.

Step 4: Submit this certificate to the new insurance provider to complete the NCB transfer process.

Documents required for NCB transfer

Here is a list of documents required for an NCB transfer:

  • Photocopy of car insurance

  • Car delivery note copy

  • Transfer application

  • NCB certificate

  • Buyer-seller agreement (Form 29 and 30)

  • Ownership transfer certificate copy

  • Copy of booking receipt in case of purchasing a new car

What causes the NCB termination?

The NCB will be terminated in case any of the following situations arise:

  • In case a policyholder does not renew an insurance plan within ninety days of its expiry.

  • In case the policyholder files an insurance claim during the policy year.

Terms and conditions of NCB transfer

Here are the terms and conditions of an NCB transfer that one needs to keep in mind:

  • One can only opt for an NCB transfer from one vehicle to another till the policyholder remains the same.

  • During a policy renewal, one can transfer NCB from one insurance provider to another.

  • Policyholders will need to submit an NCB certificate from the current insurer in case of offline applications.


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