If there is one thing that offers a much-needed peace of mind when driving a car, it is car insurance placed in your car’s glove box. It not only offers protection against costly vehicle repairs but also covers medical expenses. For those who have a claim-free record, insurers have their own way of rewarding the policyholder.
No Claim Bonus is a reward that helps you reduce the price of your premium. You gain from a no-claim bonus in several ways. However, the one benefit of NCB you must know is how to save on insurance premiums with No Claim Bonus.
What is a No Claim Bonus
If there is one thing that offers a much-needed peace of mind when driving a car, it is car insurance placed in your car’s glove box. It not only offers protection against costly vehicle repairs but also covers medical expenses. For those who have a claim-free record, insurers have their own way of rewarding the policyholder.
No Claim Bonus is a reward that helps you reduce the price of your premium. You gain from a no-claim bonus in several ways. However, the one benefit of NCB you must know is how to save on insurance premiums with No Claim Bonus.
Benefits of No Claim Bonus
The main benefits of no claim bonus that every policyholder must know to save on insurance premiums are as follows:
1. Cost Savings
Over the years, an NCB will help you save a lot of money on your premium. For instance, you will just have to pay Rs. 5,000 if your annual premium is Rs. 10,000 and your NCB is 50%. Particularly over a lengthy term, this is a significant savings.
2. Transferable
You can transfer your collected NCB to your new policy should you change insurance or vehicles. This transferability guarantees that your good driving record will be acknowledged and appreciated.
If you decide to transfer your coverage from one insurer to another, NCB remains with you as well. If you decide to switch insurance providers, NCB is simple to transfer. All you have to do is get your NCB certificate from your former insurer and give it to the new one.
3. Encourages Safe Driving
Since the bonus depends on not filing claims, it motivates insured to drive carefully and prevent mishaps. The policyholder gains from this as well as helps to promote general road safety.
4. Higher Market Value
Since an unclaimed insurance record indicates the automobile has been kept in good condition, a car with one can have a better market value. A clean insurance record makes the car more appealing on the resale market.
How is No Claim Bonus Calculated?
NCB is calculated based on the total cost of your car insurance beginning in the second year. Typically, the premium savings start at 20% and increase with each succeeding year without a claim. However, it should be mentioned that the NCB is only determined using the premium’s own damage component and not its third-party component.
Starting at a base percentage, the NCB increases annually without claims filed. Usually starting at 20% for the first year free from claims, the discount increases to 50% for five straight years free from claims.
| Number of Years | NCB Discount |
| One Claim-free Year | 20% |
| Two Consecutive Claim-free Years | 25% |
| Three Consecutive Claim-free Years | 35% |
| Four Consecutive Claim-free Years | 45% |
| Five Consecutive Claim-free Years | 50% |
Let’s understand the no claim bonus calculation with an example. Mr. A may be entitled to a reduction of up to 50%, or Rs. 9,000, if Mr. A pays an insurance premium of Rs. 20,000 for the automobile, of which Rs. 18,000 is the personal damage component, and he has not filed an insurance claim for five years in a row.
How to Transfer No Claim Bonus
The policyholder receives a No Claim Bonus as a reward for not filing a claim. The guidelines set out by the Insurance Regulatory and Development Authority of India (IRDAI) govern the awarding of this incentive. You are still eligible to collect the NCB that has accrued in your name even if you choose to purchase car insurance from a different provider or purchase a new vehicle after selling your old vehicle.
To maintain the benefit, you will require a certificate of No Claim Bonus Transfer from the insurance provider. Remember that the time between your insurance policy’s expiration date and renewal shouldn’t be more than ninety-nine days.
Since the NCB is linked to the automobile owner and not the vehicle, NCB transfer regulations imply that the benefit cannot be transferred to new owners of the vehicle in the event of a sale. Here is a list of documents that the insurance companies will ask you for NCB transfer:
- Application for NCB transfer
- Sales agreement
- NCB certificate from the insurer
- Copy of the car’s insurance policy
- Booking receipt in the case of purchasing a new car
How to Maintain and Maximize Your No Claim Bonus
Some of the most important tips to maintain and maximise car insurance no claim bonus are as follows:
1. Drive Safely
Driving safely and avoiding collisions is the easiest way to guarantee you build your NCB. Always be careful on the road, follow traffic laws and keep within speed limits. Good driving habits not only prevent mishaps but also support the general safety of every other person using the road.
2. Choose Out-of-pocket Small Repairs
Paying for modest repairs or damages out-of-pocket could be more affordable than filing a claim. Small claim filings could cause your NCB to be lost, possibly more valuable than the cost of repairs. Paying for the repairs yourself would be better if the repair cost is Rs. 1,500 and your NCB is 20% on a Rs. 10,000 premium.
3. Select a Higher Voluntary Deduction
The amount you agree to pay out-of-pocket before the insurance starts is your optional deductible. Choosing a higher deductible can help you avoid filing small claims that would otherwise affect your no-claim bonus and help reduce your premium.
Both sides want to avoid small claims that may be handled without insurance. Hence, this strategy fits your interests as well as those of the insurer.
4. Set up Anti-theft Devices
Using certified anti-theft devices on your car will help to cut your premium and maybe lower the danger of theft. Discounts for automobiles with these safety features are common from insurers, and it can also help to keep your NCB intact. Reducing the possibility of theft helps you lower the possibility of having to make a claim, thereby saving your premium.
5. Regular Vehicle Maintenance
Regular maintenance of your car helps to lower the possibility of accidents and prevent breakdowns. Make sure your car is serviced following manufacturer recommendations and that any problems are resolved right away.
How to Restore No Claim Bonus
After a claim is filed, the no-claims bonus will be reduced upon renewal the following year. The policyholder must go the entire 12-month term without making any claims in order to restore the no claims bonus once again.
You can restore the no claim bonus on your car insurance by renewing your policy on schedule. Make sure you do this no later than ninety days before your current policy expires. Next, try to cover small losses yourself rather than filing a claim to keep your NCB intact.
Summary
Insurance premiums and car repairs both come at significant costs. Insurers ensure that you get rewarded for not claiming your policy and keeping your car well-maintained for the whole year. Another benefit of no claims bonus insurance premium is that it helps you save on your insurance premiums. Not only can cautious planning and smart driving keep you and others safe, but over time, they will also pay off in lower insurance rates.
This is why you must drive carefully, prevent unwarranted claims, and take advantage of a No Claim Bonus on your auto insurance rates. Your dedication to prudent insurance handling and safe driving will pay rewards in terms of significant savings.
FAQ about No Claim Bonus
How can I save my no claims bonus?
You can save your NCB by driving carefully, avoiding accidents, and not claiming your insurance. You can also maintain your car regularly and park in secure locations.
Is it good to protect no claims bonus?
Yes, you can keep your discount by safeguarding your no claims incentive. This also helps you save more on your insurance premiums.
Can I pay to keep my no claims bonus?
Yes, many insurance companies let you choose to safeguard your NCB by paying a higher price.
How much is 7 years no claims worth?
To boost your no claims bonus, drive carefully, avoid filing claims, and keep your insurance coverage up to date.
Can NCB be transferred from one car to another?
Since NCB is tied to the car owner and not the car, it can easily be transferred from one car to another. Additionally, the NCB can also be transferred from one insurance provider to another insurance provider as and when the policyholder decides to change the insurance provider.
