No Claim Bonus in Car Insurance

No claim bonus (NCB) is a reward you receive from your insurance company for every year you don't make a claim. You can use this reward to get a discount at the time of car insurance renewal. By providing no-claim bonus, insurers aim to encourage vehicle owners to drive responsibly and avoid raising any claims.

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What is No Claim Bonus in Car Insurance?

When you don't make a car insurance claim in a policy year, your insurer offers you a no claim bonus. NCB is simply a discount on your car insurance renewal premium. Your insurance company gives you this reward for your good driving behaviour.

A no claim bonus in car insurance ranges between 20% and 50%. Insurers start providing NCB right from the first renewal of your motor insurance policy, and it grows by 5% every year up to 5 consecutive claim-free years. However, making a claim on your car insurance policy will reset your no-claim bonus to zero.

Benefits of No Claim Bonus in Car Insurance

No claim bonus is a great aspect of four-wheeler insurance that allows car owners to achieve sizeable savings on their policy premiums at the time of renewal. Here are its advantages:

1. Rewards for Responsible Driving:

   No claim bonus is a reward the insurance company provides you for attentive and responsible driving. If you have not filed a claim against your car insurance policy in the entire year, you deserve the NCB reward.

2. Lower Premiums:

   NCB discounts enable you to achieve significant cost savings on your car insurance policy premium on its renewal. This discount on policy premium accumulates over up to five consecutive years of not making any claim and can go up to 50%.

3. Conveniently Transferrable:

   The no-claim bonus in car insurance is provided to the policyholder, not the insured vehicle. So, as long as you renew your policy before its expiry, you can continue enjoying NCB benefits. Moreover, you can easily transfer this reward in case you may want to change your insurer or buy a new vehicle.

How to Calculate NCB in Car Insurance?

Your car insurance company starts awarding NCB discounts on your OD (Own Damage) premium from the first policy renewal. This reward increases by 5-10% yearly until you don't raise a claim in the policy year. Let's understand this with an example:

The OD premium for your 1st year car insurance is Rs. 22,000.

If you did not make any claim in the 1st year, you would receive a 20% NCB that will be applied to your policy renewal for the 2nd year.

So, your car insurance renewal premium for the 2nd year will be Rs. 17600.

Here's the calculation:

This bonus will keep increasing yearly for 5 consecutive claim-free years.

Below is the table illustrating the NCB percentage offered for each claim-free year.

You can also use an NCB calculator to easily calculate your no claim bonus percentage in car insurance.

How to Transfer NCB to a New Car Insurance?

NCB transfer is an easy process that you can do both online and offline for a new car or insurer. This is because the NCB reward is for the policyholder, not the vehicle. However, you cannot transfer it to another person.

While renewing your car insurance online, share your previous policy number, correct NCB, and the previous insurer's name with your new insurance provider. The insurer will transfer your existing NCB to your new policy, and you can continue enjoying the same benefits.

For an offline NCB transfer, simply contact your old insurer and submit the required documents. Your old insurer will provide you with an NCB certificate, which you need to present to the new insurer for the NCB transfer.

Documents Required for NCB Transfer

To transfer your no-claim bonus when switching insurers or buying a new vehicle, have these documents handy:

• NCB transfer application form
• Copy of the car insurance policy
• Buyer-seller agreement (Forms 29 & 30)
• Copy of transferring old registration certificate/ownership transfer certificate (in case of sale of old car)
• Copy of delivery note (in case of sale of old car)
• Copy of the booking receipt (in case of buying a new vehicle)
• NCB certificate from previous insurer

When is the No Claim Bonus Terminated?

A no claim bonus in car insurance policy can get annulled under the following situations:

• If you make a car insurance claim during the policy year.
• If you don't renew your vehicle insurance policy within 90 days of its expiration.
• If you don't transfer NCB to another insurer or a new car insurance policy within a certain period.

What is NCB Protector in Car Insurance?

A no claim bonus only applies for a claim-free policy year, and it becomes zero once you make a claim. With the NCB Protect add-on, you can protect your no claim bonus even after raising a claim on your car insurance policy.

The highly useful NCB Protector add-on comes at a small extra premium. You can opt for it while buying or renewing comprehensive four-wheeler insurance.