What is No Claim Bonus in Motor Insurance?

You can get useful discounts and reduce the cost of maintaining your vehicle by taking advantage of No Claim Bonus (NCB)
 

Vehicle insurance provides an excellent opportunity for savings. Premiums may be high at the beginning, but they can decrease significantly thereafter, thanks to the No Claim Bonus (NCB) feature. Although most policyholders know about the No Claim Bonus, they are unaware of its subtleties, which results in problems during renewal. This deep dive will help you understand what is a No Claim Bonus and how to use it to your advantage.

What is a No-Claim Bonus?
 

NCB (No Claim Bonus) is a benefit available to every motor insurance policyholder. It allows them to receive rewards for not using their insurance. An NCB entitles the policyholder to a discount on their insurance premium if no claims are filed. Upon renewal, it continues for subsequent years.

What is No Claim Bonus in car insurance?
 

A No Claim Bonus is a discount on the premium for car insurance. You can obtain it by maintaining a claim-free record. If you do not have a claim-free history at the time of acquiring your first vehicle insurance policy, you will not be eligible for an NCB discount. When you renew your insurance for the first time and have not made claims for the previous year, you will be eligible for up to 20% NCB.

How to check the No Claim Bonus in car insurance?
 

No Claim Bonuses are applicable starting from the second year of insurance coverage and last up to five years in a row. You can get up to 20% discount on your insurance premium if you have not filed a claim in the first year. 

Do I lose my No-Claim Bonus if I buy a new car?
 

It is worth noting that the NCB relates to the vehicle owner, not the vehicle itself. If you have NCB discounts on your current car and decide to buy a new one, you can transfer the benefits to the new car. However, if the car owner dies and the car passes on to someone else, NCB cannot be passed on to them. NCB is not transferable from one person to another.

Can a No-Claim Bonus be denied?
 

The No-Claim Bonus can be refused in two situations. The insurance provider has the right to refuse a No-Claim Bonus if the policyholder makes a claim during the policy period. The second situation when a No-Claim Bonus can be denied is when there is a gap of more than 90 days between insurance periods, calculated from the former insurance's expiration date. The user must extend their vehicle insurance coverage within 90 days of the previous policy expiration.

What causes NCB termination?
 

No Claim Bonus (NCB) termination happens when a policyholder makes an insurance claim. NCB rewards you for claim-free years, but making a claim resets it to zero, terminating the bonus. Once the No-Claim Bonus facility terminates, you won’t receive any benefits on your insurance premiums.  

How to check NCB in car insurance?
 

To check your No Claim Bonus (NCB) on car insurance, follow these steps:

1. Contact your insurance provider or visit their website.

2. Provide your policy details and personal information.

3. Request an NCB certificate or check your policy documents for NCB information.

4. Review the certificate or policy to verify the accumulated NCB percentage.

5. Ensure accuracy and contact your insurer for any discrepancies or queries about your NCB status.

How does the NCB work in car insurance?

A No Claims Bonus (NCB) in car insurance rewards responsible and claim-free driving. It encourages policyholders to drive safely and maintan their four-wheeler well. Here's how it works:

1.  Accumulating NCB:
 

For each claim-free policy year, you earn an NCB percentage, usually starting at 20% and increasing annually, up to 50%.

2. Transferable benefit:
 

NCB is transferable when you change your car or insurer. You can carry your earned NCB to the new policy, reducing your premium.

3. Claim impact:
 

Making an insurance claim resets your NCB to zero. So, if you avoid claims, your NCB builds up over the years, leading to lower premiums.

4. Protecting NCB:
 

Some insurers offer NCB protection, which allows a specific number of claims without losing your bonus.

NCB is a cost-saving benefit that rewards safe driving and reduces car insurance premiums.

Benefits of No Claim Bonus in car insurance

In addition to its numerous advantages, No Claim Bonus (NCB) in car insurance is a valuable incentive for policyholders. Here are the benefits explained.

• Premium reduction: NCB significantly reduces your car insurance premium, which can lead to substantial savings over time.
• Cost-effective renewals: Each claim-free year adds to your NCB percentage, resulting in even lower premiums during policy renewals.
• Incentive for safe driving: NCB promotes responsible and cautious driving behaviour, reducing the frequency of accidents and claims.
• Transferable: You can transfer your NCB when switching insurers or purchasing a new vehicle. This flexibility ensures you can enjoy the discount continuously.
• Accumulates over time: NCB accumulates annually, with the potential to reach up to 50% discount, providing long-term financial benefits.
• NCB protection: Some policies offer NCB protection, allowing a specific number of claims without affecting your bonus, safeguarding your discount.
• Encourages claim avoidance: As policyholders strive to maintain their NCB, they are more likely to pay for minor damages themselves instead of making small claims, which keeps premiums stable.
• Higher savings for experienced drivers: Experienced drivers who have accrued NCB over several claim-free years can enjoy substantial premium reductions, making insurance more affordable.

What is NCB protector in car insurance?
 

In car insurance, an NCB (No Claim Bonus) protector is an optional add-on that safeguards your accumulated NCB percentage even if you make a certain number of claims during the policy term, preventing its reduction to zero.

How to transfer NCB to a new car insurance policy?
 

Transferring your No Claim Bonus (NCB) to a new car insurance policy is a straightforward process. Here's a step-by-step guide:

• Step 1:Contact your current insurer:
   

   Inform your current insurer about your intention to switch to a new car or insurer.

• Step 2:Request NCB certificate: 
   

  Ask your current insurer for an NCB certificate. This document will specify your earned NCB percentage.

• Step 3:Purchase the new policy: 
   

  Acquire a new car insurance policy for your vehicle.

• Step 4:Inform the new insurer: 
   

  Notify your new insurer about your intent to transfer your NCB. Provide them with the NCB certificate.

• Step 5: Verification: 
  
  

  The new insurer will verify the NCB certificate and adjust your premium accordingly.

• Step 6: Application of NCB: 
  
  

  Your new policy will reflect the NCB percentage you earned from the previous policy, reducing your premium cost.

• Step 7: Continue safe driving: 
  
  

  Maintain a safe driving record to accumulate NCB in your new policy for further premium reductions.

Documents required for NCB transfer
 

To transfer your No Claim Bonus (NCB), you typically need these documents:

• NCB Certificate from your current insurer.
• New car insurance policy documents.
• Vehicle registration certificate (RC) copy.
• Proof of sale of your old car if you're switching vehicles.
• ID and address proof.

Ensure these documents are accurate and up to date for a smooth NCB transfer.

Having understood the importance of a No Claim Bonus, you should ensure that you are making the most of it. Ensure that your insurance plan offers a No Claim Bonus. You can buy insurance having the No Claim Bonus feature from the IDFC FIRST Bank mobile application. You can customise the policy to suit your requirements and earn maximum benefits.

Another valuable addition to your car insurance would be FIRSTForward, IDFC FIRST Bank’s FASTag. You can enjoy various benefits on individual and corporate vehicles and reduce the time wasted at toll plazas.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.