Comprehensive car insurance plans provide you with innumerable benefits. Besides offering you a comprehensive scope of coverage, you get add-ons to enhance the coverage, value-added services and also attractive premium discounts. In fact, the premium discounts offered in car insurance policies can reduce the premium by more than half. No Claim Bonus (NCB) is one such way to reduce your car insurance premium. Do you know what no claim bonus is and how can you maximise its utilization? Let’s find out –
What is NCB in insurance?
Coverage under the comprehensive car insurance policy comes with a term of one year. If, during the year, you don’t make any claim in your policy you get a no claim bonus. This no claim bonus lets you claim a premium discount in the renewal premium for the next year. Moreover, if you do not make any claim in simultaneous policy years as well, the no claim bonus rate keeps increasing and offering you higher premium discounts every year.
Now that you know what is NCB in insurance and that it increases every year, let’s have a look at the NCB rates. Here are the applicable rates of no claim bonus available in car insurance policies –
|No claims in the first policy year||20%|
|No claims in two successive policy years||25%|
|No claims in three successive policy years||35%|
|No claims in four successive policy years||45%|
|No claims in five or more successive policy years||50%|
Though NCB allows attractive premium discounts, you lose the accumulated NCB if you make a claim in your policy. Moreover, if you sell your car, you need to transfer the accumulated NCB from your car insurance policy in your name to retain it.
Process of retention
The process to retain the NCB depends on the situation when retention is required. As stated earlier, there are two instances wherein you are required to retain your NCB –
- When making a claim
- When selling your car
Here is the process for each instance –
- When making a claimWhen you make a claim in your policy, you lose the NCB. To retain, you can either not raise a claim or you can choose a NCB insurance add-on. Not making a claim is advised if your claim amount is small. For smaller claims, it is beneficial to pay the costs from your pockets rather than making a claim and losing the NCB discount. However, when the costs are substantial, making a claim is inevitable. In that case, having a NCB insurance add-on is advised. The add-on protects the accumulated NCB even if a claim is made under the policy. You just have to choose the NCB insurance add-on when buying or renewing your car insurance policy and pay an additional premium. If you do so, your NCB would be protected even when you make a claim.
- When selling your carIf you are selling your car, you should request the insurance company for a NCB transfer. The insurance company would ask you to submit a proof of the sale of the car and then issue a NCB Certificate in your name. This certificate helps you in retaining your accumulated NCB. When you buy a new car and a new car insurance policy, you can use the certificate to claim a NCB discount in the policy’s premium. The certificate would be valid on another car insurance policy in your name.
NCB is, therefore, a great way to reduce your car insurance premiums by up to 50%. You should, therefore, be careful in retaining your policy’s NCB whether you sell your car or make a claim. NCB protect add-on is a must for protecting your accumulated NCB and earning a considerable premium discount. Make sure to choose this add-on when buying or renewing your car insurance policy. In case of selling your car, make sure to avail the NCB certificate. Protect and use your policy’s NCB and save on your premium costs.