No Claim Bonus (NCB) in Car Insurance

No Claim Bonus (NCB) in car insurance

NCB in insurance is a benefit given by insurance companies to policyholders for not making any claims during the policy period. NCB in car insurance is an excellent way for individuals to save on their car insurance premiums. Essentially, the longer the policyholder goes without making a claim, the higher the NCB percentage they receive. In India, NCB can help our owners to reduce their insurance premiums by up to 50%. Therefore, the No Claim Bonus is a great incentive to drive safely and avoid accidents, as it can help reduce the cost of getting car insurance. So, if you currently have a car insurance policy, make sure you are aware of your NCB benefits and how it can help you save money on your premiums while driving safely on the roads. 

How does NCB in insurance work?

NCB comes into effect when you do not raise a claim against your motor insurance policy during the policy term. In simple words, you add 20-50% NCB to your policy for every claim-free year. This benefit then gets you a discount on the renewal premium. This means, if you have 20% NCB in your account, you get a 20% discount on the premium. 

You get the benefit of NCB on comprehensive car insurance policies. The first NCB of 20% gets added during the first policy renewal, provided you have a claim-free record. NCB will increase with each claim-free year. You can accumulate up to 50% after five consecutive claim-free years. 

How does No Claim Bonus Work?

A no-claim bonus operates in a simple manner. Assume for the moment that you are a careful driver and that, for the duration of the policy, you do not make any claims against your auto insurance.

It’s time to renew your coverage because its term is almost up. At this point, your insurance provider recognizes that you have driven safely and have not made any claims for the duration of the coverage.

As a result, when you renew your auto insurance coverage for the upcoming term, they give you an NCB discount. With each year that passes without a claim, the no-claim benefit grows.

Let’s say, then, that you received a 20% discount during your first year of no claims. For a maximum of five years, you may receive an extra 5–10% discount for each succeeding year without a claim. It can add up to provide you with a sizable policy rate reduction for your auto insurance.

Features and Benefits of NCB in Car Insurance

Reward yourself for safe driving: Who doesn’t enjoy rewards? A no-claim bonus is your reward for driving your car safely, responsibly, and keeping it well-maintained for the whole year.

If you haven’t filed a claim for anything under your insurance coverage for the entire year, you haven’t experienced any serious accidents or car breakdowns, and you are fully eligible for the NCB prize.

Reduced policy premium: Over a maximum of five years, the no-claim bonus discounts accrue. The NCB discounts provide you a large waiver on your policy payment when you renew your motor insurance, which lowers the cost of your auto insurance.

Policyholder NCB: The fact that a no-claim bonus is given to the policyholder rather than the insured vehicle is one of its most important characteristics. Therefore, whether you decide to buy a new automobile or sell your current one, you won’t have to worry about losing the advantage. You are still eligible to get the NCB benefit as long as you consistently renew your auto insurance coverage.

Transferable benefit: One transferable advantage is the no-claim bonus. As mentioned previously, the bonus can be moved to the insurance policy for your new car if you purchase one.

However, in the event that you sell your car, the no-claim bonus stays with you as long as you pay the insurance rates for your next car on time and renew it before it expires.

Furthermore, if you move insurance companies, you keep your no-claim incentive for your car.

Who Should Opt for a No Claim Bonus Protection Cover Add-On in Car Insurance?

All types of vehicle owners can benefit from the no NCB Protection Cover add-on because every automobile or motorcycle is vulnerable to theft, damage, and other hazards at any moment. However, the add-on coverage is crucial for you in particular if any of the following apply to you:

If you own a pricey two- or four-wheeler, replacing it in the event that it is stolen could be costly.

If you live somewhere where there are frequent natural disasters that could affect your car, including earthquakes, riots, cyclones, floods, etc., then filing a claim is likely.

if you wish to keep the no-claim bonus benefit and have owned a car for longer than two years.

When is NCB Add-On Cover Not Applicable?

The easiest way to make sure you don’t lose your NCB benefit while filing an insurance claim is to use the no-claim bonus insurance rider. The no-claim bonus add-on, however, is not available in certain circumstances for auto insurance policies, including

If you have a no-claim bonus add-on with your auto insurance policy, only one claim will be waived off in a policy year. You will forfeit the reward if you submit more than one claim.

You have ninety days from the date of expiration to renew your automobile insurance coverage if it has expired before then. You forfeit the advantage of the prior policy’s no-claim bonus if you renew the coverage after the first ninety days.

When purchasing or renewing a car insurance policy, the no-claim bonus protector coverage must be included. It cannot be added to or removed from your insurance plan in the middle of the policy term.

If the insured submits a false claim or provides false information regarding the accident or damage, the insurer has the right to revoke the no-claim bonus payment.

How ToTransfer a No Claim Bonus to a New Car Insurance?

It is the policyholder who receives the no-claim benefit, not the covered car. It can therefore be moved to a new insurance policy from an alternative provider.

The NCB can be transferred with ease and simplicity from an existing auto insurance plan to a new provider. Purchasing an insurance plan through an insurance agent, offline, or online may result in somewhat different steps, but the general process is always the same.

If you purchase a new auto insurance policy online, be sure to accurately tell the insurance provider about the no-claim bonus you received from your prior auto insurance plan. You should also include information about the previous insurer and the policy number.

The new insurer will transfer the no-claim bonus from your previous insurer to your new insurance policy because it is given in accordance with IRDAI criteria.

Documents Required for Transferring NCB in Car Insurance

Submit the following documents to the insurer to get your no-claim bonus transferred to the new motor insurance policy:

1. A no-claim bonus transfer application form
2. Copy of the vehicle insurance policy
3. Sales agreement (Form 29 and Form 30)
4. Copy of the booking receipt in case of purchase of a new vehicle
5. Copy of the transferring old registration certificate or ownership transfer certificate in case of sale of old vehicle
6. Copy of the delivery note in case of sale of old car

How To Ensure You Do Not Lose NCB During Motor Insurance Policy Renewal?

Even when you renew your policy with the same insurer, you can transfer the no-claim bonus from your current policy to a new one for the benefit of the policyholder. To keep the no-claim bonus advantage, you must renew your insurance policy before it expires.

If you renew your vehicle insurance policy with us within ninety days of the previous policy’s expiration, you will still be able to keep the no-claim bonus benefit.

Here’s how to renew your Tata AIG auto insurance coverage both before and after it expires:

Steps to Renew a Motor Insurance Policy Before Expiry 

1. Visit our Motor Insurance page and select the car or bike option according to your vehicle type.
2. Enter your vehicle registration number and select the ‘Renew’ option.
3. Fill out your personal details and vehicle details. Also, add the add-ons you want with the insurance plan, including the NCB Protection Cover add-on.
4. Get an instant vehicle insurance premium quote.
5. If the quote suits you, proceed with the payment online.
6. Once renewed, the car insurance policy will be emailed to your authorized email ID.

Steps to Renew a Motor Insurance Policy after Expiry

1. Visit our Motor Insurance page and select the car or bike option according to your vehicle type.
2. Enter your vehicle registration number and click on the ‘Renew’ option.
3. Provide all necessary person and vehicle-related details, and choose the NCB Protection Cover and other add-ons that you want.
4. Also, provide the information about any claims made in the previous policy tenure and the date of expiry of the policy.
5. After all the details are submitted, your vehicle insurance premium is generated and displayed on the screen.
6. If the premium quote suits you, complete the premium payment online, and your expired policy will be renewed.
7. Once renewed, the car insurance policy will be emailed to your authorized email ID.

No Claim Bonus in Third Party Insurance

There are three different kinds of motor insurance policy covers available: comprehensive, own damage, and third-party.

1. The fundamental insurance policy that is required by law for all motorized vehicles is known as third-party coverage.
2. To obtain coverage for both car-owner damages and your own vehicle, you can take out own damage coverage in conjunction with a third-party policy.
3. Last but not least, a comprehensive auto insurance policy offers both own and third-party damage coverage, offering the highest coverage benefit among all policy kinds.

Only own damage and comprehensive insurance policies are eligible for the no-claim bonus discount; third-party vehicle insurance policies are not. The No-Claim Bonus Protector Cover cannot be purchased in conjunction with a third-party auto insurance policy.

Likewise, this advantage does not apply to any other additional coverage. Therefore, adding or removing any further add-ons other than NCB Protect Cover won’t have an impact on how long your earned no-claim bonus discount is valid.

How To Calculate No Claim Bonus for Car Insurance?

When it comes time to renew your automobile insurance policy, the no-claim bonus benefit helps to lower your rate. It is crucial to comprehend the no-claim bonus’s calculation as a result.

For example, 

This is an example of how to compute the no-claim bonus for auto insurance:

Assume an automobile with a first-year IDV of ₹8 lakhs and a ₹24,000 own damage cover premium. Assume for the moment that the policyholder is eligible for a no-claim bonus of 20% after the first year of no claims.

After deducting the premium by 20%, he will receive a ₹4800 savings. When the policy is renewed for a second year, ₹19,200 will be the premium that must be paid.

For each subsequent year without a claim, this bonus will grow by a tiny proportion. When renewing your policy, you might receive a 50% discount on the price if you have gone five years without filing a claim.

When is the No Claim Bonus Terminated?

There are several reasons why your insurance can cancel your no-claim bonus:

1. Your no-claim incentive will automatically expire if you make a claim during the policy’s term. Nonetheless, you are protected against a single claim during the insurance period by the NCB Protector Cover add-on.
2. You will forfeit the collected no-claim bonus benefit on your vehicle insurance policy if you don’t renew it within ninety days of it expiring.
3. Your NCB discount will be eliminated if you move your auto insurance policy from one insurer to another and neglect to transfer the no-claim bonus to the new insurer within ninety days of the move.

How to Check No Claim Bonus in Car Insurance?

You can use the no-claim bonus slabs to verify the no-claim bonus while purchasing a car insurance policy.

1. When you renew an existing auto insurance policy, you can verify the applicable no-claim bonus on your insurance plan by logging into your registered account on the insurer’s website.
2. When you purchase the policy, the document that details the no-claim bonus computation is also sent.
3. You can ask the insurance company or an insurance agent about the appropriate no-claim bonus before renewing your car insurance policy if you choose to do so offline.

FAQs about No Claim Bonus (NCB) in Car Insurance

Q1. What is No Claim Bonus (NCB) in car insurance?

A1. NCB is a benefit provided by insurance companies to policyholders for not making any claims during the policy period. It rewards safe driving and offers discounts on insurance premiums.

Q2. How does NCB work in car insurance?

A2. For every claim-free year, policyholders earn a percentage of NCB, typically ranging from 20% to 50%. This percentage is then applied as a discount on the renewal premium.

Q3. How much discount can I get with NCB in car insurance?

A3. In India, NCB can help policyholders reduce their insurance premiums by up to 50%. The longer you go without making a claim, the higher the NCB percentage you receive.

Q4. Is NCB applicable to all types of insurance policies?

A4. No, NCB is applicable only to comprehensive and own damage car insurance policies. Third-party insurance policies do not qualify for NCB benefits.

Q5. Can I transfer my NCB to a new car insurance policy?

A5. Yes, NCB is transferable from one insurance policy to another and even between insurance providers. You need to provide relevant documents to ensure the smooth transfer of NCB.

Q6. What happens to my NCB if I make a claim?

A6. Making a claim during the policy term results in the loss of accumulated NCB. However, with the NCB Protector Cover add-on, you may be protected against the loss of NCB for a single claim.

Q7. Are there any circumstances where I may lose my NCB?

A7. Yes, your NCB may be terminated if you fail to renew your policy within 90 days of expiration, or if you switch insurers without transferring the NCB within the stipulated time frame.

Q8. How can I calculate my NCB for car insurance?

A8. NCB calculation involves applying the accumulated percentage discount to the renewal premium. The discount percentage typically increases with each claim-free year.

Q9. Can I check my NCB status online?

A9. Yes, insurance companies provide online portals where policyholders can check their NCB status by logging into their accounts or contacting customer service.

Q10. Who should opt for NCB Protection Cover add-on?

A10. The NCB Protection Cover add-on is beneficial for all vehicle owners, especially those who wish to safeguard their NCB against the loss due to a single claim or policy renewal lapses.