No Claim Bonus (NCB) in Car Insurance Policy

No Claim Bonus or NCB in car insurance is a reward offered by insurers to policyholders for not raising any claim during the policy tenure. This reward can be used to avail discount during car insurance renewal. By offering this benefit, insurers aim to encourage vehicle owners to drive responsibly and avoid filing 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 NCB, which is simply a discount on your car insurance renewal premium. It is a reward given by the insurer for good driving behaviour.

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. The No Claim Bonus becomes zero if you raise any claim during the policy tenure.

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:

• Rewards for Responsible Driving: NCB 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.
• Lower Premiums: NCB discounts enable you to achieve significant cost savings on your car insurance policy premium on its renewal. This discount accumulates over up to five consecutive years of not making any claim and can go up to 50% on policy premium.
• 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 discount on the OD (Own Damage) premium from the first renewal of the policy. This reward increases by 5-10% yearly until you don't raise a claim in the policy year.

For example, the OD premium of your car insurance for the 1st year is Rs. 22,000. If you did not make any claim during the policy tenure, you 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 for your four-wheeler insurance.

How to Transfer NCB to a New Car Insurance/Insurer?

NCB transfer is an easy process that can be done both online and offline to a new car or insurer since the reward is offered to the policyholder and not the vehicle. Though, it cannot be transferred to another policyholder.

While renewing your car insurance online, you must provide your new insurer with details such as the old policy number, the correct NCB, and the name of your previous insurance company. The insurer will transfer your existing NCB to your new policy, and you can continue enjoying the same benefits.

However, in the case of an offline NCB transfer, you simply get in touch with your old four-wheeler insurance company to request an NCB transfer and submit the required documents. Your old car insurance company would provide you with the NCB certificate, which you need to submit to the new insurer to get your NCB transferred.

Documents Required for NCB Transfer

To transfer your NCB in case you switch to another insurance company or buy a new vehicle, you need to keep the following documents handy with you:

• 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?

The 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?

You know that the No Claim Bonus only applies for a claim-free policy year, and it becomes zero once you make a claim. With NCB Protect add-on , you can protect your NCB even after raising a claim on your motor insurance policy.

This highly useful add-on comes at a little extra premium and you can opt for it while buying or renewing a comprehensive four-wheeler insurance policy.

Wrapping Up

No Claim Bonus is a benefit offered by insurers to policyholders for their responsible driving and not filing any claims during the policy tenure. A maximum of 50% discount on your four-wheeler insurance premium can be availed if you do not make any claim for 5 consecutive years and avoid policy lapse. However, it is suggested that you opt for the NCB Protector add-on when you buy car insurance to keep your NCB benefits alive even if you file a claim in a policy year.