Motor Insurance No Claim Bonus- An Advantage to Policy Holders

No Claim Bonus or popularly known as NCB, is a benefit that is given by insurers to policy holders for claim free policy years. Giving you a high saving of almost up to 65% on your renewal premiums, an NCB is a sure advantage, if utilized well.

NCB in Detail- What’s in Store?

No claim bonus is a reward to the policy holder for not having executed a claim in the previous policy year. In simple words this means, if you have an insured vehicle for which there wasn’t any claim in the previous year, you could be entitled to a discount on your premium on renewal.  Claiming an NCB has its set of conditions.

  • To begin with, this discount offered on renewal premiums is a percentage that is applicable only to the ‘own damage’ part of the premium. The own damage portion of the premium is around 80% and the remaining 20% is for Third-party damages.
  • Making an insurance claim, sets your NCB meter back to zero. So you may have had multiple claim free years, but one single claim could just get your bonus to nil. So your next renewal premium would work out higher.
  • NCB cannot be transferred from one policy holder to another. However it is transferable from one insurance company to another or one vehicle to another (subject to conditions).

What’s your saving?

No Claim Bonus range between 20% to 50% .The amounts of discount depends on the number of claim free years you have had. So the more claim free years, higher is the discount on the premium.  The rate of NCB discount is regulated by the IRDA. So whoever be your insurer, the bonus rate is the same.

Policy Term % of Discount on Own Damage premium
Zero claims in the preceding policy year 20%
Zero claims in 2 consecutive years of insurance 25%
Zero claims in preceding 3 consecutive years of insurance 35%
Zero claims in preceding 4 consecutive years of insurance 45%
Zero claims in preceding 5 consecutive years of insurance 50%

Transferability of NCB

The requirement of transferring the NCB could arise, in times of a new car purchase or in case you are changing your insurance company during renewal. So at such times, how does the process of transferability work?

  • Purchase of a new vehicle:

NCB could be transferred from your old vehicle to a new one provided it is of the same type, which means – four-wheeler to four-wheeler and two-wheeler to two-wheeler. When you sell your old vehicle, ensure ownership is transferred. You would need a photocopy of the new entry in the RC book for insurance purposes. Insurance companies require this to confirm the new owner and sale.

  • Change in insurer:

In case of change in insurer, you would have to produce the NCB certificate from the previous insurer as proof of the accumulated NCB earned. You would be required to furnish a fresh proposal form along with a nominal fee for transfer of insurance. In any kind of NCB transfer, the no-claim certificate for the previous policy years is an important document for claiming the discount. Do remember, this NCB certificate has a validity of 3 years, within which you are entailed to transfer it.

Making the Most of Your NCB

NCB is a privilege for claim free policy years. But be aware it is not guaranteed always and could be terminated under certain grounds. Thus to make the most of your NCB,

  • Avoid making small claims. However small your claim may seem, a single claim is enough to strike of the accumulated benefit. So for minor damages to your vehicle it pays to get it done from your own expenses.
  • Renew your policy on time so that you don’t let your NCB lapse. If the policy is not renewed within 90 days of its expiry, NCB becomes zero
  • Also be aware, when you transfer your NCB from one vehicle to another, the previous vehicle would not enjoy the NCB discount.