Insurance: What is NCB in case of insurance? How can you take advantage of it?

While insuring a vehicle, one often hears the term "No Claim Bonus" (NCB). This is a special facility available to the vehicle owner that can help you save a lot on your insurance premium. No Claim Bonus (NCB) is a kind of reward given to the policyholder by the insurance company. This reward is received when the policyholder does not make any insurance claim for his vehicle during the entire policy year. The benefit of NCB is available in the form of a discount on the premium while renewing the policy. This discount can start from 20% and go up to 50%.

How is No Claim Bonus calculated?

NCB is calculated based on your claim-free years. It starts from the second year of the policy and can last up to 5 years.

First claim-free year: If no claim is made in the first year, a discount of 20% is given on the renewal premium for the second year.

Second consecutive claim-free year: The discount increases to 25%.
Third consecutive claim-free year: Discount increases to 35%.
Fourth consecutive claim-free year: Discount increases to 45%.
Fifth consecutive claim-free year: Discount increases to a maximum of 50%.

After five consecutive claim-free years, you continue to get a 50% discount on renewal every year until you make a claim. However, it is important to note that the NCB discount applies only to the 'Own Damage' premium and not to the third-party liability premium.

Benefits of No Claim Bonus
The biggest advantage of NCB is that it reduces your insurance premium significantly, thereby saving you money. It encourages policyholders to drive safely so that they can avoid accidents and maintain their NCB. Also, NCB is linked to the policyholder and not the vehicle. This means that if you sell your old car and buy a new car, you can transfer your earned NCB to the new car policy.

How can NCB be cancelled?

As soon as you make any claim during your policy term, your NCB becomes zero on the next renewal. Apart from this, if you do not renew your policy within 90 days of its expiry date, then your NCB also expires.

Rules and procedure for transferring NCB

When you sell your old car and buy a new car, you can get your NCB transferred to the new car insurance policy. For this, you have to get an NCB certificate from your old insurance company. This certificate is valid for 3 years. While buying a new policy, this certificate has to be given to the new insurance company, after which the benefit of NCB is available on the premium of the new policy. Keep in mind that NCB can be transferred only to similar types of vehicles, i.e., NCB of a car to a car and NCB of a bike to a bike.

NCB Protection Add-on
If you don't want to lose your NCB due to minor claims, you can buy the 'NCB Protection' add-on cover. This add-on cover allows you to keep your NCB protected even if you make claims up to a certain limit.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.