NCB in insurance or No Claim Bonus, holds much value and is a great reward for those who ensure safe driving. Though third-party car insurance is mandatory as per the guidelines of IRDAI but the car owners can also opt for comprehensive or own damage car insurance policies to cover other financial losses (caused to their own car, etc.) and enjoy the benefits of NCB.
Understanding NCB, its working, benefits, exemptions, eligibility and other crucial aspects is important for every car insurance holder and learn how to save an amount on car insurance premiums easily.
To help you with all the significant information relating to it, we have curated this comprehensive read.
What is NCB in insurance?
NCB or No Claim Bonus is a reward provided to policyholders for successfully completing a claim-free period throughout the policy term. The NCB is provided based on the guidelines listed by the IRDAI.
By lowering the premium amount, NCB also helps policyholders with financial efficiency by providing them with an affordable car insurance policy and promoting safer driving. The discounts on the premium vary from 20% - 50% depending on the claim-free years and insurers.
How does NCB work?
No Claim Bonus (NCB) is a reward granted to the car insurance policyholders for having a claim-free year(s). The discount on the insurance premium increases with each passing claim-free year.
The discounts on the premiums start accumulating from the first claim-free year and can reach to a maximum of 50% off on your next car insurance renewal.
Accumulations and the Maximum limit of the NCB
The maximum limit of the no claim bonus in car insurance is a 50% discount on the premium of the car insurance. The NCB is calculated depending on the number of claim-free years a policyholder have.
Here is the quick information relating to the claim-free years and the respective discount provided to the insured on their premium.
| Claim-free renewals (years) | Discount on Premium | Fine Reduction (expected) | Special Help Desk | Online Payment Support |
|---|---|---|---|---|
| On the 1st claim-free renewal | 20% | 20% | Yes | Yes |
| On the 2nd claim-free renewal | 25% | 30% | Yes | Yes |
| On the 3rd claim-free renewal | 35% | 20% | Yes | Yes |
| On the 4th claim-free renewal | 45% | 25% | Yes | Yes |
| On the 5th claim-free renewal | 50% | 25% | Yes | Yes |
Who is eligible to avail of the perks of the NCB?
The individuals should have met the following requirements to enjoy the benefits of NCB: - Must have a comprehensive car insurance policy or own damage car insurance policy. - Anyone owning a car for 2 or more years and is not willing to lose the benefit of No Claim Bonus. - When an individual has not claimed insurance in the preceding year.
Terms and conditions under the NCB claim
Getting a claim from the NCB in insurance needs to fulfill some terms and conditions. The terms and conditions relating to the claim of this reward for the policyholder might vary depending on the insurer, say HDFC EGRO car insurance, ICICI Lombard, etc. and thus it is suggested to carefully read all the information relating to the car insurance policy.
However, one point to be noted is that NCB for insurance can be enjoyed at the time of car insurance policy renewal.
Under what circumstances does NCB get terminated
NCB for vehicle insurance gets terminated as well under some conditions. On termination of the No Claim Bonus (NCB), the benefit becomes zero and the individuals will no longer be able to enjoy its benefits.
A few of the conditions where NCB is not provided are:
- The NCB becomes zero if the benefit is claimed without the NCB protection add-on.
- If, on investigation, the insurer finds misrepresentation or a fraudulent claim, the NCB gets cancelled and the add-on is also considered invalid.
- Demanding a claim during the policy term.
- If the car insurance policy is not renewed within the grace period, i.e, 90 days (3 months) from the date of its expiry, the NCB lapses.
- If the policyholder fails to transfer the NCB to the insurer company within the defined timeframe.
- In case of accidents, except for cases where the insurance company compensates for the loss that occurred.
What Importance does NCB hold?
No Claim Bonus in car insurance policy is a valuable feature and carries loads of amazing benefits that lure the policyholders and, beyond question, help them in many ways.
Here are some of the great benefits policyholders can avail:
Discounted premiums: On every claim-free period, there is a specific discount provided by the insurance company on the premium amount. As a result of this, the policyholders can secure their car at an affordable price while focusing on the savings.
Transferable: No matter if you are changing the insurer or are selling out the vehicle, the NCB is completely transferable. The NCB incentive is linked to the owner and not to the vehicle, thus it is not at risk while changing the insurer or selling the car.
Promotes safe driving: When you drive safely, the possibility of a claim reduces to a large extent, ending up with a claim-free year. The insurance companies reward policyholders with certain discounts on the premium amount, encouraging safe driving.
Aiding financial efficiency: The NCB motor insurance incentive helps policyholders in making long-term financial benefits by offering them discounted premiums based on their driving records for the preceding year(s).
What factors influence the NCB auto insurance?
No Claim Bonus is dependent on multiple factors apart from the driving habits of the individuals for the preceding year, and thus, it also gets affected by numerous factors.
Some of the major factors influencing the NCB are:
Claim-free year(s): The number of claim-free years highly determines the discount percentage on the car insurance premium. The discount on premium range from 20% - 50%. With every passing claim-free year, the discount percentage increases.
Driving record: Another crucial factor in determining the NCB car insurance is the driving history of the policyholder. A clear driving history attract great NCB.
Location: The geographical location also impacts the NCB percentage. The areas with higher risk might have a different rates as compared to the areas with lower risks of accidents, natural calamities etc.
Driving experience of the policyholder: The age and experience of the policyholder somewhere impacts the NCB. The policyholder with much experience usually attracts higher discounts on the insurance premium.
Terms and conditions of the policy: The terms and conditions of NCB car insurance including the transfer listed in the policy might vary depending on the insurer.
Continuity of insurance policy: The proper renewal and continuity of the car insurance policy further influence the ongoing benefits of this incentive.
How can I protect my NCB for vehicle insurance?
Protecting the NCB is a smart move one can take to ensure enjoying the ongoing benefits it carries. It might sound daunting but we have got you some simple ways through which you can easily secure the NCB. Retain your NCB with these simple ways:
- Get a NCB retention add-on cover.
- Raise a claim request wisely.
- Ensure timely renewal of car insurance policy.
- Adapt healthy driving habits.
- Properly maintain your car by getting it serviced on time.
Things to consider
Below are some smart things to be considered to avail of the NCB for insurance. - Try not to file a claim in case of minor repairs or damage. - Get an add-on along with the car insurance policy. - Ensure timely renewal of car insurance policy or within the grace period (i.e. 90 days). - Check for the NCB when you renew car insurance.
Conclusion
NCB in insurance is a great reward helping the policyholder to pay less premium by just sticking to traffic laws and regulations for safe driving. It offers policyholders with the opportunity to save more and make long-term investments while adhering to the traffic laws and regulations simultaneously. Further, it is recommended to check the terms and conditions stated under the car insurance policy opted by you for better clarity.