If you have driven carefully and avoided any incident, there will be no auto insurance claim by the end of the year. To reward you for being so diligent, your insurer offers a No Claim Bonus that lightens your premium load for the next year. Question is, if you decide to sell your car, do you also have to part with this hard-earned benefit? Absolutely not!
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Let’s find out how to protect it…
In the world today the premium you pay on your standard auto insurance program, and the add-on plan/s, are a necessity. With national statistics suggesting that of the approximately 22,000 vehicles reported missing in 2014 (of which 6,019 were cars 1) only 2,322 are ultimately recovered, and with roads claiming more than 16 lives every hour on an average in accidents (that is over 1.41 lakh people dead), it sure seems that way.
Given these circumstances, NOT HAVING an incident seems like an exception to the rule. And with good drivers at the wheel, a fair amount of luck, some people do manage that. When you drive carefully and avoid any incident, you don’t make any motor insurance claim at the end of the year. And if you manage that impossible feat, the insurance service provider decides to award you a No Claim Bonus that lightens your premium load for the next year.
Why do Insurance Companies Provide No Claim Bonus?
Apart from rewarding you for driving carefully and practicing road safety, insurers have another reason as well; people who rarely or never file claims are also less of a financial burden on them. Why not rewards their low-risk status through NCB and such discounts on the annual premium for policy renewal? This reward also reinforces the act of not filing for minor claims. And why not when you can avail as much as 50 percent discount on the car insurance premium with the NCB certificate?
Finding out the NCB of a car owner is not too difficult. All the insurance service providers have to do is check if there were any claims last year and last year’s NCB.
Here is a table showing how NCB is calculated across the motor insurance industry.
How does No Claim Bonus Work?
| Claim Free Year | Bonus % |
|---|---|
| 1 Year | 20% |
| 2 Years | 25% |
| 3 Years | 35% |
| 4 Years | 45% |
| 5 Years | 50% |
| 5+ Years | Depends |
Generally, your NCB is checked at the time you ask to renew your existing vehicle insurance plan. Here are its other unique features. Your NCB, and car insurance, applies to you, not your vehicle
For all purposes, your NCB applies to you and not to your car. So, if you ever decide to sell your vehicle and purchase another, you will be allowed to retain your NCB. In the event that you own more than one vehicle, you will be allotted separate NCBs for each of them. You will have to earn the NCB for each car individually.
Also, remember that your NCB can be transferred to another car belonging to you, but at no point in time can one NCB apply to more than one automobile. Neither can the NCB score of one car be extended to another one.
Retain Your NCB after Selling Your Car
By that same logic, always bear in mind that when you sell your car, the motor insurance does not automatically get transferred to the new car owner. If you wish to transfer it in their name, they will need to apply to the service provider to make the requisite endorsement to the policy.
If you buy a new auto insurance plan, you can have the NCB transferred to it. If you don’t, the NCB can still be retained. All you have to do is inform the insurance service provider and obtain the NCB preserve letter from the insurance company. This certificate is valid for up to two years. However, one point to consider is that you cannot preserve the NCB across different classes of vehicles.
While your NCB cannot be transferred to another person, there is a provision by which you may be able to transfer it to your spouse. This caveat is at the sole discretion of the service provider.
How to be able to preserve your NCB even as You Make a Claim
You must now be wondering if you stand to lose your NCB as soon as you make a claim. Well, not necessarily.
If there has been an accident that could be adjourned as partly or completely your fault, there is bound to be a reduction in your NCB. One way to protect against it is to opt for an add-on NCB Protector cover.
Under this additional retention cover, for a small premium, certain number of claims made by the car owner up to a certain limit will not impact the NCB at all. This means you get to file (certain number of) claims while keeping your NCB intact, thus still availing of the discount on your annual comprehensive insurance premium.
If you have gone through five years without a single claim and have a 50 percent NCB score, the NCB Protector Scheme is definitely for you. In fact, right after two straight years of no claims, this protection cover must seem very appealing to most car owners.
No Claims Bonus: A Rebate worth Retaining
With regard to insurance, most times you are only paying, the premium or filing a claim to protect yourself from financial distress. If you have been lucky enough to not have made a claim for an entire year a more, and receive the No Claim Bonus benefit, reap its fruits. Even if you have to sell the car, retain the NCB—it is worth the effort.
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