You’ve heard of NCB or NCB Protector, you’ve heard of No Claim Bonus, but does your motor insurance policy really cover it?
What if we told you, that if you didn’t claim for a year, your premium gets even cheaper next year?
So, let’s try and help you understand one of the most used abbreviations that you will find in any motor insurance quotation: No-Claim-Bonus or NCB.
The ‘No Claim Bonus’ abbreviated as NCB is an incentive which is given by insurers to policy-holders to maintain them and nudge them to drive safely.
Sometimes this bonus is abbreviated as NCD which stands for No Claim Discount. NCB is nothing but a discount offered to the policy-holder upon policy renewal if they make no claims during the policy period
For claims free first year, discount of 20% is allowed upon renewal of policy. Subsequent claims free years can earn discount for you up to 50%. In other words, the discount percentage offered by the insurer increases over consecutive years in which the policy-holder does not make a claim.
As mentioned earlier, for every year that you’re insured without making a claim, you’ll earn the ‘No Claim Bonus’. It is important to note that once any claim is made, the NCB, whatever percentage it may be, turns to Zero so it is always advisable not to take smaller claims under insurance and do some cost benefit analysis before you intimate a claim.
The ‘NCB’ is transferable if you decide to change your insurer, at the end of your insurance policy. However, you need proof of your previous year’s ‘NCB’ in order to transfer to a new insurer.
This proof is usually found in the insurance policy itself. It can also be found in the renewal notice, the letter your previous insurer sends inviting renewal of the policy.
If your insurer hasn’t listed the ‘NCB’ in any of the above-mentioned places, you can request the same via their website, phone, etc.
The ‘NCB’ is usually lost when you file a claim during the year. Unless—you were smart enough to buy a No-Claim Bonus Protector add-on cover, which protects ‘smaller claims’ or ‘specific types of damage’. That means you can still make certain kinds of claims, and still won’t lose your NCB.
Your NCB is also lost if your insurance isn’t renewed within 90-days from the expiry date of your previous policy.
One has to keep in mind that ‘NCB’ is offered to the owner and not the vehicle. Therefore, the ‘No Claim Bonus’ can be offered to the policy-holder even if he decides to change his vehicle.
The ‘No Claim Bonus’ is transferred to the policy-holder’s new vehicle instantaneously.
However, if you sell your vehicle, the purchaser will not reap the benefits of the ‘NCB’ you developed.
Third-Party Insurance: No Claim Bonus is applicable in only comprehensive motor insurance policies on Own Damage section of premium. Therefore, if you have third-party insurance for your vehicle, you are not eligible for a ‘NCB’.
The ‘No Claim Bonus Protector’ or NCB Protector Add-On is exactly what it sounds like. By paying a small extra fee to the insurer, the NCB will stay even if you make a claim in a year. Some insurers are offering up to 2 claims per year under the No Claim Bonus Protector’ or NCB Protector Add-On. However you need to renew the policy with the same insurance company to avail this benefit.
Someone who self-drives his car- safely and follows the rules or and regulations or employed a good driver and doesn’t want to lose out on their -accumulated NCB, should opt in.
Example of No-Claim Bonus
Akash made a claim in the second year of purchasing his new car. This was his first claim and so he had already built up some NCB. But, Akash didn’t choose to get his NCB Protected, when he purchased the policy. And, therefore, after the insurer processed Akash’s claim, his NCB had fallen back to 0%.
However, Akash’s best friend Mohit is much more practical. Mohit had already got the NCB protected with an No Claim Bonus Protector’ or NCB Protector Add-On. So, when he filed a claim, his insurer company didn’t drop his ‘No Claim Bonus’ percentage.
In conclusion, one should really keep an eye out on the No Claim Bonus Protector’ or NCB Protector Add-On covers’ offered by insurers in India. Not only that, one must check if the claim they are going to issue to the insurer, is even worth it if their ‘No Claim Bonus’ falls down the following year.
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