All about No Claim Bonus in motor insurance!

A No Claim Bonus or NCB is popularly known as a good way to ensure discount on car insurance premium as a reward for effective and safe driving. There are however many misconceptions about No Claims Bonus and its eligibility especially in case of selling of the vehicle or purchasing a new vehicle. Let us take a look at some of the common questions about No Claim Bonus and their answers.

 

What is No Claim Bonus?

 

No Claim Bonus commonly known as NCB is a benefit available to all motor insurance policyholders allowing them a reward for safe driving. As the term suggests, No Claim Bonus makes the policyholder eligible for a discount or bonus on the insurance premium if there are no claims lodged against it and is awarded for the subsequent years at the time of policy renewal. It is offered on the own damage portion of the car insurance policy and in case the vehicle owner only opts for a third party insurance, he or she would not be liable for a No Claims Bonus.

 

How much discount on premium can I get using No Claim Bonus?

 

No Claim Bonus is the same offered by every insurance service provider. The bonus for cars and two wheelers starts at a 20% discount at the second year / renewal of the car or two wheeler insurance policy and can go up to a maximum of 50% in the sixth year. In this day and age of rising inflation, any discount on insurance premium is welcome for policyholders thereby making No Claims Bonus an essential part of every motor insurance policy.

 

Is there a No Claim Bonus Add-on?

 

Since No claim bonus (NCB) is offered as a reward to policyholders who do not have any claim in the previous years, even a small claim can cancel the full bonus bringing it down to zero. Motor insurance companies however offer customers the options of choosing a No Claim Bonus retention insurance add-on cover also known as NCB retention add-on. Such add-on covers offers a protection on NCB up to a certain limit allowing NCB claim even if claims have been made till a specific pre-determined limit in the previous year.

 

Under what circumstances can No Claim Bonus be cancelled or declined?

 

No Claim Bonus can be denied or forfeited in two cases. Firstly the insurance company can deny a No Claim Bonus in case if the policyholder has made any claim during the policy period. The second case in which the insurance company can deny no claim bonus is when there is a break of more than 90 days between insurance periods counted from the date of expiry of the old insurance. In other words the user must renew his or her car or two wheeler insurance within 90 days of the expiry of the existing motor insurance policy.

 

I am buying a new vehicle after selling my existing one, can I transfer my NCB?

 

Since No Claim Bonus is offered to the policyholder and not the vehicle, it can be transferred in the name of the current vehicle owner which he or she can use while purchasing insurance against any new vehicle of his or her choice.

 

What are the steps involved in transferring NCB?

For transferring NCB from one vehicle to the other, in case if the owner sells the first vehicle, he should keep a photocopy of the transfer of ownership certificate and the old registration certificate. The next step is taking the No Claim Bonus certificate from the motor insurance company after forwarding a copy of the delivery note. The third step is giving a written request with the new insurance company or for the new policy with the same insurance company to transfer the NCB in the existing policy to the new one. NCB can be transferred even if you change the company for the new policy. The holding letter or NCB certificate is valid for up to three years and can be transferred to the new vehicle policy anytime within the stipulated period.

[Source: https://blog.bankbazaar.com/all-about-no-claim-bonus-in-motor-insurance/]