The Motor Vehicles Act makes it compulsory for car owners to have a minimum of third-party car insurance for their vehicles. Non-compliance to this rule can result in fine up to INR2000 and/or imprisonment up to three months. It can also result in suspension of your driving licence as well as registration. Even as car insurance is mandatory, it protects you from financial costs arising out of accidents. Therefore, you should get valid car insurance to not just be on the correct just side of the law but also to protect you and your vehicle.
We might be of the opinion that it is expensive to purchase a comprehensive car insurance policy, but what if you were told that there was a way you could lower your car insurance premium just by driving carefully. Yes, you read that right. Safe driving can earn you as much as 50 per cent discount on car insurance policy premium due to No Claim Bonus (NCB).
Think about the days when you were in school. When you performed well, didn’t your teacher reward you? No Claim Bonus works in the same manner. Except that this is a reward by your car insurance provider. If you drive carefully , and, as a result, do not make any claims on your car insurance policy, your car insurance company rewards you by offering No Claim Bonus discounts (NCB). Many people are of the opinion that if they don’t make any claims during the policy year, their money has been wasted. Through NCB, your car insurance company ensures that you are rewarded for not making claims. The best part about NCB is that with every claim free-year the discount keeps increasing. Therefore, you are eligible to earn up to 50 per cent discounts on car insurance premium, which can translate into substantial savings.
Let’s take an example to explain this better. Mr Dhawan bought a car insurance policy for his newly purchased Maruti Swift in 2013. At the time, he did not get any discount on the car insurance premium. Over the course of one year, he did not make any claims on his car insurance policy, and as a reward for exhibiting good driving behaviour in the previous policy year, Mr Dhawan was offered a discount of 20 per cent on insurance premium. This motivated Mr Dhawan to drive safely, and, therefore, not make any claims over the next few years. While he did get a few scratches and dents to his car during this period, he managed to bear the repair costs himself instead of making claims with the car insurance. As a result, he now earns a discount of 50 per cent on car insurance premium. Mr Dhawan will continue to earn the discount until he makes a claim. The discount will go back to nil in case a claim is made on the insurance policy.
The most effective way to save your NCB is to be cautious while driving and not get involved in accidents so that no claims have to be made for car repairs. Now, even if one drives carefully, accidents can happen, especially due to the mistakes of others. In case your car is damaged, get estimates for repairs and compare it with the NCB discount along with the excess in your policy. For those who don’t know what excess is, it is basically an amount that one needs to bear during every claim. If the total of two is lower than the discount earned through NCB, pay for the repair and retain the NCB discount, as done by Mr Dhawan.
Another way to protect your NCB is by opting for the No Claim Bonus Secure add-on cover. This can be purchased with your comprehensive add-on cover at an additional cost. It protects the NCB earned by allowing you to make ‘one claim’ during your policy period.
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