Many people believe that car insurance is only required for bad drivers. But did you know that your insurance company gives you dsscount for safe driving and a policy year without filing any claims? That is known as a No Claim Bonus (NCB). When you renew your insurance coverage, you may take advantage of NCB, which is effectively a discount on your insurance payment. You can get up to a 50% reduction on premiums if you go several years without filing any claims! Isn't that incredible?
The NCB discount is applied to the premium amount during the renewal of the existing policy. The offered reward begins with a 20% discount and goes up with each consecutive year of no claim to 50%, where the discount percentage gets capped.
Let us explore car insurance no claim bonus more and find its benefits and procedures.
To begin with, NCB has a positive financial impact on the policyholder as it significantly influences the renewal of car insurance premiums. In addition, the NCB entitlements are transferable, and the owner can enjoy the financial advantage even on purchasing a new vehicle. But before we proceed further, here is a quick recap on the types of car insurance.
Primarily, there are two types of car insurance in India:
Third–party coverage and comprehensive policy - The scope of third-party insurance is to cover the accidental losses of third-party individuals, businesses, or vehicles caused by the insured car.
A comprehensive plan - It protects the car owner's risks from own damage like financial losses due to an accident, theft, and more, while extending third–party coverage as well. Therefore, it is imperative to add that the Indian Motor–Vehicle Act has made the third-party insurance plan mandatory for all vehicles on Indian roads.
The capacity of the engine, registered location (of the car), year of manufacture, fuel type of the car, accident history and the insured declared value (IDV) are the various parameters that impact car insurance premiums.
A comprehensive policy premium's own-damage component is considered for calculating NCB, leaving out the amount apportioned for third-party coverage.
How To Be Eligible for NCB?
The car owner or the insured becomes eligible for a car insurance no-claim bonus when there is no claim in a term year of the insurance policy. Many owners are known to forego small claim amounts to keep the record intact for availing the NCB for future renewals of their policies; this is because the bonus, sometimes, may offer a higher financial gain compared to the value of the claim.
No Claim Bonus Benefits
Some of the important benefits are:
1. Savings on Renewal premiums
For every claim-free year, the policyholder earns a discount ranging from about 20% in the second year to about 50% for five consecutive no-claim years. The discount helps the policyholder to reduce the premium amount during renewals.
2. Owner’s Advantage
The NCB applies to the car owner or the policyholder. Therefore, if the owner decides to buy a new car, the NCB accumulations are considered when working on the new vehicle's insurance premium. For example, when you sell a seven-year-old car and upgrade to a new sedan model, the accumulated NCB can be transferred to the new vehicle’s policy. As a result, you save substantially on the new premium. However, the NCB is not transferred to the new owner when an insured car is sold.
3. Easily Transferable
The NCB transfer process of No Claim Bonus Benefits to the new car's policy is simple and easy. Even if a policyholder decides to shift the policy to a different insurance provider due to service or other issues, the NCB of the previous plan can be transferred to the new insurer. In this case, the policyholder will need to follow certain procedural formalities.
4. An incentive for responsible driving
A careful driver will have no damages to the vehicle and, therefore, no insurance claim leading to NCB.
No Claim Bonus Discounts
| Period | Discount% |
| For the first no-claim year | 20% |
| After two consecutive claim-free years | 25% |
| At the end of three successive claim-free years | 35% |
| After four consecutive no-claim years | 45% |
| For five consecutive claim-free years | 50% (capped) |
To illustrate the calculation of NCB, a policyholder may get a discount of 20% for the No-Claim Bonus in Car Insurance Renewal for the second year. In other words, if the first year premium paid is INR 10000, of which approximately INR 9000 is the own damage component, then the NCB amount is INR 1800.
The NCB Transfer Process
If a policyholder wishes to opt for a new insurance provider, the NCB transfer process can be completed in a few simple steps.
First, a transfer request needs to be registered with the existing insurer with policy details, a registration certificate (RC) copy and a valid photo-id.
Then on verification, the current insurance company will issue the NCB certificate.
Finally, the policyholder needs to submit the certificate to the new insurer.
NCB Protector
In case of a claim, the policyholder loses the benefit of the Car insurance no claim bonus. Several insurance providers offer an add-on NCB protector against an additional premium. Opting for a protector plan can save the bonus accumulations in your policy even if you have a claim.
No Claim Bonus in Car Insurance Renewal rewards the policyholder for not making any financial claims during the policy tenure. In other words, it is also an incentive for responsible driving without causing any or minimum accidents. The bonus percentage varies from 20 to a maximum of 50%.
There are several No Claim Bonus benefits for the insured, from savings on renewal premiums to transferability of the accumulations. NCB is not applicable to third-party policies and is calculated on the damage component of the premium for comprehensive coverage policies.
In case of a claim, the policyholder loses the entire NCB accumulations. However, the NCB protector option plan adds value to NCB and helps maintain its financial advantage. In addition, timely policy renewal is a necessary requirement.
Several leading insurance providers in India offer car insurance plans that you can buy online or in regular offline modes. For example, Generali Central total Insurance Solutions offers customer-friendly complete car insurance plans. From add-on benefits to emergency roadside assistance, Generali Central has many personalized services besides a hassle-free, super-fast claim settlement process.
Please click here if you wish to know about Generali Central car insurance.
