Decoding motor insurance no-claim bonus and its benefits for you
When you own a vehicle in India, having motor insurance is not just a necessity but also a legal requirement. Among the various features of motor insurance policies, the No-Claim Bonus (NCB) stands out as a reward mechanism for safe driving and claim-free years. This article aims to decode what NCB is and how it can benefit you as a policyholder.
What is no-claim bonus?
The No-Claim Bonus (NCB) is a discount on renewal premiums offered by insurers if no claim is made during the previous policy period. It begins at 20% for the first claim-free year and can increase to 50% after five consecutive claim-free years. This means if you make no claims for five years, your premium could potentially be reduced to half its initial amount.
How to avail NCB?
To avail of the NCB, you simply need to renew your policy within 90 days of its expiry. You must not have made any claims in the previous year. The discount will automatically apply to your renewal premium. If you switch insurers, you can still retain your NCB. You will need to provide proof of your claim-free record from your previous insurer.
Transferring your NCB
A unique feature of the No-Claim Bonus is that it is attached to the policyholder and not to the vehicle. This means if you decide to buy a new car or switch insurers, you can transfer the accumulated NCB to your new vehicle or policy. However, this transfer must be done within three years; otherwise, the accumulated bonus will be lost.
Impact on premium
The impact of an NCB on motor insurance premiums is significant. If your annual comprehensive car insurance premium is ₹10,000 without any discount, achieving a maximum NCB of 50% after five consecutive claim-free years reduces your renewal premium to ₹5,000. This incentivizes safe driving and managing minor claims independently. It encourages policyholders to maintain a claim-free record.
Protecting your NCB
Many insurers in India offer an add-on known as "NCB Protect." This add-on allows policyholders to make a specified number of claims without affecting their accumulated No-Claim Bonus. Despite the additional cost, this cover ensures that minor accidents or claims do not reset your NCB to zero. It preserves your discount. It is a safeguard for maintaining your NCB despite minor incidents.
