What is NCB (No Claim Bonus) in Car Insurance?

Individuals must know that vehicle insurance is mandatory in India and needs to be in place before the vehicle is ready to go on the road. Since vehicle insurance is a mandate in India, people are generally on the lookout for the cheapest one, unaware of features like NCB. The NCB or “No Claim Bonus” is a reward that car insurance providers extend to their customers when they do not claim in a particular policy year. This reward states that the insurer can enjoy a substantial discount while renewing their car insurance policy. Leading car insurance providers award policyholders with a No claim bonus. Now, most individuals are unaware of this term and do not know how it works.

The NCB or No Claim Bonus provides a special advantage to policyholders, thereby allowing them to reduce their car insurance premiums. It works as a reward system, and individuals start gaining 20% of NCB if they have not raised any claim for the first policy year. Consequently, one can earn an additional 5% from the second year, deducting 50% in the sixth consecutive year.

Moreover, the NCB offers various benefits under a car insurance plan like:

• Affordable premiums
  The NCB, in policy terms, allows a policyholder to earn approximately 20%-50% on their car insurance plan. In addition, if an individual does not make any claim in the policy year, a particular NCB discount percentage is provided to the policyholder. Individuals can use this discount amount to reduce their premium amount during their car insurance renewal.
• Earn rewards
  The NCB acts as evidence of being a responsible driver and maintaining the insured car properly. Therefore, apart from knowing the NCB full form, car owners must know that they can earn rewards by not making claims in the previous policy period.
• Directly granted to policyholders
  One of the biggest takeaways from NCB is that the benefit is granted to a policyholder or car owner and not the car. Therefore, whether an individual purchases or sells their insured car, the NCB stays with them until he renews his car insurance policy. One must note that the accumulated bonus will not be transferred to the new car owner.
• Transferable to an insurer or another car
  If the policyholder purchases a new car, the no-claim bonus form transfers the bonus amount to another vehicle. Moreover, it can also be transferred from one insurance company to another if the car owner plans to purchase insurance from another insurance company.

The overall process of transferring the No Claim Bonus or NCB is simple. However, the process differs if the car owner plans to purchase new car insurance online, offline or via an agent. In case of purchasing online car insurance, the car owner needs to intimate the new insurance organisation about the accurate NCB, name of a previous motor insurance provider and previous policy number to get the NCB transferred.

The new insurance organisation will then transfer the previous policy NCB from the old insurance provider to the present insurance policy. If the car owner wants to purchase a new car insurance plan offline or through an agent, they need to follow the steps mentioned below:

Step 1: First, connect to your old motor insurance provider.

Step 2: Place a request for NCB transfer and submit necessary documents.

Step 3: The insurance company will issue the NCB certificate.

Step 4: Now, submit the NCB certificate to the new insurance organisation. Step 5: The current insurance provider will transfer the NCB.

Policyholders are required to submit the following documents to the insurance company to get their NCB transferred:

• Car insurance photocopy
• Copy of car delivery note (in case of selling the old car)
• NCB certificate
• Transfer application
• Buyer-seller agreement (form 29 and 30)
• Copy of transferring old registration certificate/ownership transfer certificate)
• Copy of the booking receipt (if buying a new car)

NCB will be terminated if either of the following situations occurs:

• If the policy is not renewed within 90 days of the existing policy expiry.
• If individuals claim during a policy year, no NCB will be granted next year.

Since NCB is extended to a policyholder and not the vehicle, it can be transferred. It can even be used while purchasing protection for any new car. However, the following are some of the terms and conditions of NCB transfer:

• NCB is transferred from one vehicle until the policyholder remains the same.
• During renewal, NCB is transferable from one insurer to another.
• To transfer the NCB, an NCB certificate from the present insurer will be required for offline applications.