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Everything you wanted to know about No Claim Bonus

25 April, 2017

When you buy a car, insuring it is the wisest action you can take. A car insurance plan secures you against all the monetary liabilities that can trouble you in case of damage or theft of your car or damage or injury to a third party.


While securing your car is good, paying premium year after year may become taxing for some. That’s when No Claim Bonus (NCB) comes into the picture. It’s one of the best benefits of vehicle insurance. Let’s learn more about it.


What is NCB?


NCB stands for No Claim Bonus. It is a reward given to you by your car insurer if you do not file a claim in a financial year. The reward is a discount on the premium when you renew your insurance.


For example, you have an insured car and didn't make a claim for the financial year 2020-2021, your insurer will give you a discount on the premium when you renew your insurance for the year 2021-2022.


However, remember that the No Claim Bonus is applicable only on the Own-Damage component of your car insurance premium, and not on the total premium you pay.


How does the NCB discount work?


When a car insurer rewards you with an NCB, it will begin the second year/when you next renew your insurance. As per the current norms in India, NCB begins at 20% and can go up to a maximum of 50% in the sixth year.


Age of PolicyNCB Percentage
After one claim free year20%
After two consecutive claim free years25%
After three consecutive claim free years35%
After four consecutive claim free years45%
After five consecutive claim free years50%


NCB belongs to you


A major feature about NCB is the fact that it belongs to the policyholder and not the insured vehicle. This means you can transfer the NCB when you change a vehicle or even the car insurer.


For Example:

You had accumulated 45% NCB on your car. You sold the car and purchased a new one. Now, the premium for the new car is ₹20,000 out of which ₹17,000 is for your own damage component. You can transfer the NCB benefit from your previous car and claim a discount on your first premium. Thus, you will only pay ₹9,350. (45% on INR 17, 000).


You can transfer NCB too


NCB transfer process is a simple one if you are moving from one insurer to another. While most firms allow the transfer without any hassles, if any dispute occurs; the new insurance firm may ask for a declaration from the old provider that the NCB is genuine.


Documents required for NCB transfer


Documents that might be required for NCB transfer include:

  1. NCB Transfer Certificate from the previous insurer to validate the applicable discount/bonus.
  2. Form 29/30 if you need to transfer the NCB from an older vehicle to the new vehicle.


How to Protect Your NCB?


While it is simple to say ‘Do not make a claim and save your NCB’, it is easier said than done. There will come moments when you have to file a claim. However, there is a way you can save your accumulated NCB despite making a claim.


You can buy an NCB Protector Add-on. It is a wise purchase which helps you save your bonus even if you make a claim subject to terms and conditions.


An NCB is a prudent thing to have. It saves on your premium amounts which you can put to better use. Ensure you accumulate your NCB percentage and buy an NCB Protector Add-on to protect your discount up to one claim.