How does NCB Help in Reducing Premium?
There are various ways that help you to reduce the insurance premium for your motor vehicle, whether it is a two-wheeler or your car. NCB (No Claim Bonus) is one of the best and most effective ways in reducing premiums.
An NCB is the reward offered by the insurance company when you have not made any claim during the previous policy year. With a claim-free policy year, you can receive a discount in the range of 20% to 50% on the car insurance premium. As No Claim Bonus gets accumulated for the driver, you have the option to transfer NCB from one vehicle to another, when you buy a new vehicle in your name. You can also transfer this benefit when switching to another insurer on the renewal of the policy.
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When you can avail of NCB?
Many people have a thinking that they can utilize NCB at any time. Actually, it’s not true, you can avail of NCB benefit from the second policy year, in case of no-claim during the previous year. If you buy a motor vehicle insurance policy for the first time, you are not eligible to claim the NCB discount. The reason is, that there is no record of claim-free policy years that can contribute towards a discount on the premium.
How NCB helps you Save on Premium
The benefit of the No Claim Bonus is not applicable to the third-party liability premium and can be availed only for the Own Damage (OD) premium component.
For instance, you bought a car in 2010 and sold it in 2015 on the 5th policy anniversary. In case, you never made a claim during this period, you earned an NCB discount of 50%. Now, if you buy a new car with a premium of Rs 19,000 and the premium component for own damage cover is Rs 15,000. In this scenario, the NCB discount is Rs 7,500 (50% of own damage premium). So, you only need to pay a premium of Rs 11,500 and you can save Rs 7,500 on the first premium.
Now, let’s go through some key tips that help the accumulated NCB to save on insurance premiums.
Obtain NCB Certificate: When you replace your old motor vehicle with a new one and sell your old vehicle, don’t forget to get a copy of the delivery note that you can forward to the insurance company and ask them for the NCB certificate. It is valid for three years and can be used to save money on the insurance premium for your new vehicle.
Use it with the New Policy: Not just buying on a new vehicle, you can also get an NCB discount on your new policy to save on the insurance cost. You only need to provide the NCB certificate to the auto dealer and you can take advantage of premium discounts on the new motor insurance policy.
Continue with the Same Insurer: In case, you are pleased with the services of your current insurer and you are continuing with the same insurance company, you can avail no-claim benefit when buying the new vehicle. To avail of this benefit, you only need to get the invoice and chassis number of your new vehicle and give this information to your insurer. Upon applicable no claim bonus, the company will offer you the cover with a reduced premium.
Preserve your No Claim Bonus: In case, you get the vehicle damage, then you have two options, either claim on the company to get the compensation for the damages incurred or bear the expenses on your own. If the expenses for vehicle repair are not huge and lower than what you can save on premium upon utilizing NCB benefit, it is recommended not to claim on the company and pay for expenses on your own. If you make a claim, you will lose the no-claim benefit and can’t get the discount on motor vehicle insurance.
Savings on your Car Insurance Policy
As per current norms, you can avail of an NCB discount as specified in the below-given table.
| No claim was made in the previous full year of insurance | 20% discount on Own Damage premium |
| No claim was made in the previous two consecutive years of insurance | 25% discount on Own Damage premium |
| No claim was made in the previous three consecutive years of insurance | 35% discount on Own Damage premium |
| No claim was made in the previous four consecutive years of insurance | 45% discount on Own Damage premium |
| No claim was made in the previous five consecutive years of insurance | 50% discount on Own Damage premium |
Conclusion
A No-Claim Bonus (NCB) benefit helps you to reduce the premium on your motor vehicle insurance policy. The NCB benefit for the car insurance policy may vary depending on the period for which you have not made any claim. If you have not made claim during the previous five consecutive years of the policy, you can claim up to a maximum of 50% discount on the Own Damage premium.
It is advisable not to make claims for small vehicle repairs, else you have to lose your no-claim benefit and cannot avail premium discount on your vehicle insurance.
