No Claim Bonus (NCB) in a car insurance policy

Understand how No Claim Bonus in car insurance works, what are its benefits, and terms and conditions.
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3 mins
28-May-2024

Every year the insurance companies revise the insurance policy premiums. Hence, you find an increased premium during policy renewal. Here’s when No Claim Bonus, popularly known as NCB, comes to your rescue. You can significantly reduce the premium while renewing your car insurance policy with the No Claim Bonus accumulated.

What is the full form of NCB in insurance?

As mentioned above, NCB stands for No Claim Bonus in insurance policy. You add a certain percentage as an NCB to your policy after every claim-free year.

What is a No Claim Bonus?

Simply put, you benefit from a No Claim Bonus in an insurance policy as a discount on the insurance premium. Insurers give the bonus as reward to the policyholders for driving safely and not making any claims during the policy tenure. This discount leads to a significant savings on the car insurance premium. If you make a claim in any policy year, the NCB will reset to zero or lower depending on the NCB credited. In such a case, the policyholder will have to pay the full premium on policy renewal.

How does NCB in insurance work?

NCB comes into effect when you do not raise a claim against your motor insurance policy during the policy term. In simple words, you add 20-50% No Claim Bonus to your policy for every claim-free year. This benefit then gets you a discount on the renewal premium. This means, if you have 20% no claim bonus in your account, you get a 20% discount on the premium.

You get the benefit of No Claim Bonus on comprehensive car insurance policies. The first NCB of 20% gets added during the first policy renewal, provided you have a claim-free record. No claim bonus will increase with each claim-free year. You can accumulate up to 50% after five consecutive claim-free years.

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No Claim Bonus (NCB) in car insurance

NCB in insurance is a benefit given by insurance companies to policyholders for not making any claims during the policy period. No claim bonus in car insurance is an excellent way for individuals to save on their car insurance premiums. Essentially, the longer the policyholder goes without making a claim, the higher the NCB percentage they receive. In India, no claim bonus can help car owners to reduce their insurance premiums by up to 50%. Therefore, the No Claim Bonus is a great incentive to drive safely and avoid accidents, as it can help reduce the cost of getting car insurance. So, if you currently have a car insurance policy, make sure you are aware of your NCB benefits and how it can help you save money on your premiums while driving safely on the roads.

Benefits of No Claim Bonus in car insurance

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

Affordable premiums

NCB makes your policies more affordable. You save 20-50% on your car insurance premiums during the policy renewal if you have a zero-claim record.

Earn rewards for maintaining your car properly

Insurers offer no claim bonus as a reward to the policyholders for driving safely and maintaining the vehicle properly. These factors make valid proof because you make no claims on your car insurance policy. Hence, you earn the reward for having good driving history.

Granted directly to the policyholders

The insurer grants the No Claim Bonus in a car insurance directly to the policyholder and not the insured vehicle. Hence, if you decide to sell the vehicle, the No Claim Bonus will remain intact. But you cannot transfer the NCB to a new owner.

Transferable to another insurer or car

In case you plan to buy a new car, you can transfer the NCB to the new policy. Also, if you decide to switch to another insurer, you can still transfer the NCB.

What is NCB protector in car insurance?

You get NCB protector as an add-on cover on a comprehensive car insurance or standalone own damage car insurance policy. This add-on cover retains the NCB value even if you have made claims in a policy year.

How is NCB calculated?

No Claim Bonus (NCB) is calculated on the basis of the number of claim-free years of the policyholder. The longer the policyholder goes without making a claim, the higher the percentage of no claim bonus they will receive on their car insurance policy.

NCB in insurance ranges from 20% to 50%, depending on the insurance provider and years of claim-free driving. Insurer applies the NCB percentage to the own damage premium of the policy, resulting in reduced insurance premiums. But you must note that if you make any claims, the no claim bonus percentage will reset to zero. Therefore, it is essential to drive safely and avoid accidents to enjoy the benefits of NCB in car insurance. Keep a track of the number of claim-free years to ascertain your NCB percentage and enjoy discounted premiums while driving safely on the roads.

Number of years

NCB discount

One claim-free year

20%

Consecutive two claim-free years

25%

Consecutive three claim-free years

35%

Consecutive four claim-free years

45%

Consecutive five claim-free years

50%


How to transfer NCB to a new car insurance policy?

The process of transferring an NCB to a new car insurance policy is simple. You can transfer the No Claim Bonus in three ways: online, offline or through an agent.

For transferring the No Claim Bonus online, you need to inform the new insurance provider. Provide details like the exact NCB, the former motor insurance company’s name, and the last policy number. The new insurance provider will transfer the No Claim Bonus to the new insurance plan.

For transferring NCB offline or through an agent, follow these steps:

Step 1: Contact 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 a No Claim Bonus 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 to transfer NCB in insurance:

  • Photocopy of car insurance
  • Copy of car delivery receipt
  • Transfer application
  • NCB certificate
  • Buyer-seller agreement (Form 29 and 30)
  • Copy of ownership transfer certificate
  • Copy of booking receipt in case of purchasing a new car

When is NCB in insurance applicable?

NCB (No Claim Bonus) is applicable in insurance when you do not make any claim in a policy year. It is a reward or discount given by the insurance company for not claiming during the policy term. NCB in insurance is usually applicable when renewing a policy and can result in significant savings on premiums.

Important things to know about NCB in insurance

NCB is a discount given by insurers on the subsequent policy premium. Some important things to note about No Claim Bonus are:

  • The discount starts at 20% and increases up to 50% based on the consecutive claim-free years.
  • NCB is applicable only to the own damage premium and not on third-party premiums.
  • Policyholders can transfer their NCB while switching their insurance provider for the same car.
  • NCB in car insurance is an essential consideration when renewing your policy.

Is NCB applicable to third-party insurance?

No, you do not get the benefit of NCB on third-party insurance. You get the benefit of NCB on a comprehensive car insurance or standalone own-damage insurance policy.

How to transfer No Claim Bonus (NCB) to new car insurance?

If you are looking to transfer your No Claim Bonus (NCB) to a new car insurance policy, then you only need to the following things.

The first step is to acquire the NCB certificate from your existing insurer. Then you need to present the certificate to your new insurer when purchasing a new policy. By doing so, you can enjoy lower premiums on the new policy. Many a times car owners in India forget to transfer their NCB to their new insurance policy, thereby losing out on benefits. Therefore, ensure to make the transfer properly to take advantage of the NCB. Follow these simple steps and enjoy discounted premiums on your new car insurance policy.

What causes the NCB termination?

The NCB gets terminated if any of the following situations arise:

  • In case a policyholder does not renew the insurance plan within 90 days from its expiry date.
  • In case the policyholder files an insurance claim during the policy year.

How to check NCB in car insurance?

Refer to the NCB slab provided by the insurer when buying the car insurance policy. You will also find the NCB calculation on the policy document. When you renew your car insurance policy online, you will see the applicable NCB on the webpage. You can also check with your agent or insurance executive to know the NCB earned.

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 transfer the NCB from one vehicle to another, provided the policyholder remains the same.
  • One can transfer NCB from one insurance provider to another only during the policy renewal.
  • Policyholders need to submit the NCB certificate online from the current insurer or apply offline.

Also, check

Zero depreciation cover

Engine protection cover

Roadside assistance cover

Pay as you drive cover

FAQs about No Claim Bonus in insurance

How is NCB protector cover beneficial?

You get the NCB protector cover as an add-on cover on a comprehensive or standalone own-damage car insurance policy. This add-on cover helps you to retain the NCB value even after you have made a claim during the policy year. You can then get a discount on the car insurance renewal premium.

How can I buy an NCB protector cover?

Buy the NCB protector cover online from the preferred insurer’s website. You add this optional cover on a comprehensive car insurance policy or standalone own-damage cover.

How to check the NCB applicable on the car insurance?

When you apply for car insurance renewal, you will see the applicable No Claim Bonus in the car insurance on the webpage. You will also find the NCB slab and calculation on the policy document. You can also check with your agent or the insurance executive to know the NCB applicable in insurance.

How do I get the NCB transfer certificate?

Contact your insurer and request the NCB transfer certificate. Every insurer has a different application process, so check with your insurer before applying for the certificate.

What if I have zero NCB in insurance?

You will not get any discount on the renewal premium. You get discounts on the premium when renewing the car insurance policy only if you have NCB.

Do you get a No Claim Bonus on third-party car insurance?

No, you do not get the No Claim Bonus on a third-party car insurance policy. You get the benefit of NCB if you have a comprehensive car insurance or a standalone car insurance policy.

Can I have a No Claim Bonus for more than one car?

Yes. NCB can be earned for more than one car if you are the owner of both the vehicles and have not made any claims in the respective policy years.

What is the maximum percentage of NCB available under car insurance?

The maximum percentage of NCB available is 50%. However, to qualify for this discount, you need to have had five consecutive claims-free years. The exact percentage of NCB depends on the number of consecutive years you have not claimed on your policy.

Is it a good idea to add a No Claim Bonus add-on to my motor insurance policy?

Yes, adding a No Claim Bonus (NCB) add-on to your motor insurance policy is a good idea. This add-on helps to protect your NCB in case of a claim, ensuring that you can enjoy the benefits of NCB even after a claim. It also provides added protection in case of minor accidents.

What happens to NCB in case of a total loss arising due to major car accident or car theft?

In case of a total loss arising due to major car accident or car theft, the policyholder will lose their NCB. However, there are some insurance providers who offer an NCB protection add-on that can safeguard the policyholder's NCB in case of a total loss. It's essential to read through the policy documents and check with the insurance provider to verify if this option is available.

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