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No-Claim Bonus (NCB) is a discount offered on Own Damage premium for not claiming on your car insurance during the policy period. This means that for each claim-free year, the NCB can be earned from 20% to a maximum of 50% over a span of 6 years. This is often regarded as the best way to reduce one’s cost of Own Damage premium at the time of renewal.
Insurers offer a no claim bonus with increasing discounts on the premium for every claim free year. But how these discounts are calculated? The table below simplifies how NCB is earned:
|No claims made in preceding 1 year of insurance||20%|
|No claims made in preceding 2 years of insurance||25%|
|No claims made in preceding 3 years of insurance||35%|
|No claims made in preceding 4 years of insurance||45%|
|No claims made in preceding 5 years of insurance||50%|
Remember! If your motive is to cut the cost of premium, then it is advisable to drive carefully and make no claims. Thus, making the most of your NCB discount.
Still confused? Watch this video!
There are some points that need to be thought of while considering a ‘No Claim Bonus’.
I am trying to understand what is No Claim Bonus? How does it impact my premium? Please help.
A No-Claims Bonus (NCB) also known as no-claims discount, is a discount recognized by insurance providers. It's basically a discount on the number of years that you haven't made a claim on your car insurance policy.
So, if you haven’t made a claim on your policy in the previous year, you gain a No-Claim Bonus. The benefit of a NCB usually carries on for five years, but some companies offer further discount for six or more years. Remember that the final amount of discount you receive varies from insurer to insurer.
In a way, having an accumulated NCB discount does help you save up on premiums.
I was just wondering if I make a claim, how does that affect my NCB?
Even if you make a single claim on your policy, you will lose the entire accumulated NCB %. Hence, it is always suggested that you should avoid making a claim on minor damages so that you can save up on NCB.
Imagine you were hit by another car and it has been confirmed that you weren’t at fault. In such case, our insurance company may be able to reclaim the payout from the other car’s insurer and your NCB may mostly not be affected. This means that you can make a claim on the other driver’s third-party insurance.
In cases where one isn’t able to confirm who is at fault, the insurance companies of both the parties may split the cost of the claims. Here the NCB of both drivers could be affected and drop to 0%.
If you pay for a new policy with a reduced NCB and are later found not at fault, you can usually get your NCB reinstated and a refund on the extra premium you paid.
What actually happens to my NCB when I change my car or insurance company?
NCB can usually be transferred to another car. But if you switch your insurance company before the year ends, you won’t be eligible to receive NCB for that year.
Some insurers may provide your proof of NCB in the car insurance renewal letter that they send to you. If it's not there, do make sure you call up your insurer and ask them to send it as it is very important.
If you cancel your policy, you have two years to reuse your NCB. Or else it would expire and you would have to start from scratch.
Will I be able to use my No-Claim Bonus on more than one car? I just bought another car, can I apply it to my second car?
Every policy requires an individual and separate No-Claim Bonus. Hence, you won’t be able to use your No-Claim Bonus on more than one car. You can definitely speak to your insurance broker or directly to your insurance company. Sometimes, they do offer an introductory discount on the second vehicle that you own.
What is NCB Protect add-on cover? How is it helpful?
The NCB Protector Add-on cover is like a blessing in disguise. So, if your car has met with an accident due to your fault and you make a claim, your NCB doesn’t drop to 0%. Every insurance company has their own rules regarding how many claims are allowed under the NCB Protect add-on rule.
Just remember one thing that this won’t necessarily stop your premiums from going up after a claim. This is because insurers use your claim history to calculate your premiums. The NCB is calculated at the end. If you have any NCB remaining with you after the claim, it may possibly help to lower your claim. But then again it won’t guarantee a lower premium than the previous year.