One of the most important factors to zero in during the renewal of car insurance is the available No Claim Bonus (NCB). NCB is a discount on your premium amount if you do not file claims throughout the policy’s term. The NCB is presented to you in your vehicle insurance if you’ve been a responsible driver and have consistently been able to steer clear of claims and accidents. In fact, insurance companies offer diverse incentives to drivers with stellar driving records.
What is no claim bonus in a car insurance policy?
A No Claim Bonus is a reward given by an offline or online car insurance provider to an insured person who has not filed any claims against the insurance for the car in a policy year. A No Claim Bonus will add up over time as a premium discount. For own damage insurance premiums, NCB discount might be between 20% and 50% off. Sometimes, instead of a premium discount, the NCB is rewarded as an addition to the sum insured.
NCB in car insurance: How it works?
When the insurance coverage expires, one must renew it. The insurers offer a No Claim Bonus as a reward if there have been no prior claims under the insurance policy. They offer the policyholders a concession or relief on the payment of the premium for the subsequent policy. The insurance policy renewal marks the beginning of this procedure.
If no claim was made during the previous policy year before the expiration of the policy term, no claim bonus in car insurance is offered the subsequent year upon renewal.
As long as the insured doesn’t file any insurance claims, the insurer offers an NCB discount during each renewal year. In case an insurance claim was filed in the preceding year, the no-claim bonus is reset to zero. This is applicable even though the policyholder may have avoided claiming for several years before that. This is how the process of no-claim bonuses in car insurance works.
Calculating no claim bonus
The no-claims bonus for car insurance is computed annually. You will receive 20% off your subsequent year’s premium if you maintain your claim-free status for another year after making no claims for a complete year. If you keep making no claims for an additional four years, you will eventually reach a 50% discount, at which point the premium for the following year will be half of what is currently due. You can refer to the No Claim Bonus tabular illustration below:
| Claim free years | NCB benefit percentage |
| On completing 1 year | 20% |
| On completing 2 years | 25% |
| On completing 3 years | 35% |
| On completing 4 years | 45% |
| On completing 5 years | 50% |
It is a cashless benefit since it is not paid immediately in cash. Rather, it will lower your insurance premium. The amount varies depending on the insurance carrier.
Depending on variables such as age, gender, and driving record, the discount amount differs among insurers. Some insurers additionally provide further discounts if you buy a car under their group coverage or renew your policy following an accident-free period.
Advantages of NCB for car insurance
As part of a comprehensive car insurance policy, the no-claim bonus offers various advantages to automobile owners such as:
- Cheaper premium: The NCB enables you to enjoy a minimum of 20% and a maximum of 50% discount on your car insurance premium. You receive a certain percentage of the NCB discount for each year without a claim. When renewing your insurance, you can use this discount to lower the premium cost.
- Win rewards; No Claim Bonus is thought of as evidence of being a responsible driver and keeping the covered vehicle in good condition. As a result, by refraining from filing any claims during the previous term of his policy, the policyholder can earn incentives in the form of NCB.
- Awarded to the policyholder: One important concept of the no-claim bonus is that the recipient of the benefit is the policyholder, not the vehicle. Therefore, the NCB stays with him as long as he keeps renewing car insurance policies, regardless of whether he purchases a new car or sells his insured vehicle. It cannot be transferred to the new owner.
- Transferable: If you choose to change your cars, the No Claim Bonus can be simply transferred to the new vehicle. In addition, if you decide to purchase insurance from a different insurance provider, it can also be transferred from one insurer to another. For the no-claim bonus to be transferred, you will require a claim bonus certificate from their previous insurer.
- Enhanced savings: If you follow all the driving rules properly, the no-claim percentage for your car insurance is guaranteed to rise. When it’s time for insurance renewal, if you haven’t filed a claim in five years you can acquire a huge discount of up to 50% on your premium.
Steps to avail your NCB for car insurance
Follow the steps mentioned below to avail no-claim bonus for your car insurance policy:
Step 1: Visit the website of your insurance provider and move on to the insurance renewal page.
Step 2: Enter your contact information, including your name and phone number.
Step 3: Fill in the information regarding your previous insurance policy on which you are availing the no-claim bonus.
(Note: The no-claim bonus is only available with comprehensive insurance policies. This benefit is not available on standalone and third-party insurance)
Step 4: Enter the details of your car. The premium amount will be displayed on the screen after adjusting your accumulated NCB .
Step 5: Verify the information, make the payment, and you’re done.
As any wise driver will tell you, driving isn’t just about driving cautiously but it’s also about safeguarding yourself against the actions of other drivers as well. While it may not be possible to always avoid making a claim, however, when it is, make sure to make the most of your efforts and reward yourself with the no-claim bonus benefit in car insurance!
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.
