Car insurance is a must-have for car owners in India, providing essential protection against accidents and damages. Among the many benefits it offers, the No Claim Bonus (NCB) stands out as a valuable reward for responsible driving. In this blog, we’ll look into the meaning of NCB, its importance, eligibility criteria, and calculation methods, and debunk common misconceptions surrounding it.
Additionally, we’ll provide useful tips to help you maintain your NCB and enjoy reduced premiums. So, if you’re curious about what the No Claim Bonus entails and how it can benefit you, read on!
No Claim Bonus (NCB) is a discount given by insurance companies to policyholders in India who do not make any claims during the policy period. The NCB is usually 20% for the first year, 25% for the second year, and so on, up to a maximum of 50% for the sixth year. This means that if you have a claim-free record for six years, you can get a 50% discount on your car insurance premium.
NCB is a good way to save money on your car insurance premiums. It is also a good way to encourage safe driving habits. If you make a claim, your NCB will be reset to zero, so it is important to drive carefully to keep your NCB and save money on your premiums.
The NCB plays a crucial role in reducing the financial burden of car insurance. By accumulating NCB, you can enjoy significant discounts on the premium when you renew your policy. When you accumulate NCB by not making any claims during the policy period, you become eligible for substantial discounts on your premium during policy renewal.
This serves as an incentive for policyholders to drive responsibly and avoid making unnecessary claims, thereby promoting a safer driving culture on Indian roads. Emphasising NCB encourages drivers to exercise caution, ultimately leading to fewer accidents and damages, benefiting both individuals and the overall community.
NCB encourages policyholders to drive responsibly and avoid accidents. When you don’t claim the policy term, you prove yourself to be a safe driver, and in return, you are rewarded with a discounted premium when you renew your policy.
Here’s how NCB rewards safe driving:
In car insurance, the No Claim Bonus (NCB) is a significant benefit for Indian policyholders who drive safely and responsibly. To avail of this reward, you need to meet specific eligibility criteria. Let’s explore these criteria and understand what it takes to qualify for NCB:
NCB accumulation is the process of building up your NCB over time, which can lead to significant discounts on your car insurance premiums. Let’s explore the requirements for accumulating NCB and how you can benefit from it:
Now that you know about NCB and the process of accumulating your NCB, several factors can impact your eligibility. Let’s explore them below:
Also Read : How to Choose the Right Car Insurance Policy?
Different insurance companies have their own NCB structures and percentage calculations. While some may offer a higher NCB percentage for claim-free years, others may have a more gradual scale.
Here are some examples of how NCB varies across insurance providers in India:
As you can see, the NCB percentages offered by different insurance companies can vary quite a bit. This is why it is important to compare NCB percentages before you buy car insurance.
According to a survey by the Insurance Regulatory and Development Authority of India (IRDAI), the average NCB in India is 25%. This means that Indian car owners are eligible for a significant discount on their car insurance premiums if they do not file any claims.
It is important to note that if you file a claim, you will lose your NCB. However, you will be able to start accumulating NCB again from the next policy year.
For example, if you have a 20% NCB and you file a claim, your NCB will be reset to 0%. However, if you do not file any claims in the next policy year, your NCB will be 20% again.
The NCB percentage is a significant factor in determining the cost of your car insurance premium. Therefore, it is important to drive safely and avoid claims to maximise your NCB and save money on your car insurance premiums.
According to a study by the Insurance Regulatory and Development Authority of India (IRDAI), the average NCB in India is 25%. The maximum NCB limit of 50% was introduced by IRDAI in 2017. In 2022, there were over 200 million active car insurance policies in India.
The NCB percentage increases with every claim-free year, and can be as follows:
Once you reach the maximum NCB limit of 50%, you will not be able to accumulate any further NCB, regardless of the number of claim-free years.
It is important to note that some insurers may have different slabs or limits for NCB. Therefore, it is always best to check the terms and conditions of your insurance policy before renewing it.
If you decide to switch your car insurance provider, you can transfer your NCB to the new policy. However, there are specific documents required for the transfer:
Policy Cancellation Proof
If you own multiple cars, you can transfer your NCB from one car to another. This means that if you have a 50% NCB on your first car, you can use that 50% NCB to get a discount on the premium for your second car.
However, you cannot use the same NCB for two policies simultaneously. This means that if you have a 50% NCB on your first car, and you file a claim on that car, you will lose your 50% NCB. You will then have to start accumulating NCB again from scratch on your second car.
Here are some key points to summarise the NCB applicability for multiple vehicles:
Let’s debunk some common myths about NCB.
Myth 1: NCB is the same for all policies
Fact: NCB percentages can vary between insurance providers. Always check with your insurer to understand their specific NCB structure.
Myth 2: NCB is transferable to other insurance types
Fact: NCB is only applicable to car insurance policies and cannot be transferred to other types of insurance like health insurance.
Myth 3: NCB is lost after a single claim
Fact: If you claim your car insurance, you will lose your No Claim Bonus (NCB). However, you can purchase the No Claim Bonus Protection add-on to protect your NCB. This add-on allows you to make up to two claims in a policy year without losing your NCB.
To purchase the No Claim Bonus Protection add-on, you will need to contact your insurance company. They will be able to tell you more about the add-on and how much it costs.
You can maintain your NCB and enjoy discounted premiums on your car insurance by following these tips:
No Claim Bonus (NCB) is a valuable reward that can save you a significant amount of money on your car insurance premiums. By driving safely and avoiding claims, you can build up your NCB and enjoy the benefits of being a cautious and claim-free driver.
If you do make a claim, you may be able to protect your NCB by purchasing the No Claim Bonus Protection add-on. By understanding the eligibility criteria, transfer process, and common misconceptions, you can make the most of your NCB and stay protected on the roads.
Q. What is No Claim Bonus (NCB) in car insurance?
No Claim Bonus (NCB) in car insurance is a reward given to policyholders for not making any claims during the policy term, encouraging safe driving habits.
Q. How does NCB benefit policyholders?
NCB benefits policyholders by offering a discount on car insurance premiums at the time of renewal, making it a financial incentive for driving responsibly.
Q. How is NCB calculated for car insurance policies?
NCB calculation is based on the number of claim-free years, with the percentage increasing for each consecutive year without making a claim.
Q. Can NCB be transferred from one car to another?
Yes, NCB can be transferred from one car to another owned by the same policyholder, rewarding safe driving across different vehicles.
Q. Is it possible to retain NCB after making a claim?
Making a claim can lead to a reduction in the accumulated NCB percentage; however, it doesn’t result in a complete loss of the NCB.
Q. How does NCB impact car insurance premiums?
NCB plays a significant role in reducing car insurance premiums, as the accumulated NCB percentage directly affects the renewal cost.
Q. Should I opt for the NCB protection add-on?
Yes, opting for an NCB protection add-on ensures that policyholders can retain their NCB percentage even after making a claim, safeguarding their NCB benefits.
Q. Can I avail NCB for multiple cars under my name?
Yes, NCB can be availed for multiple cars under your name, provided you have not made any claims for those vehicles during the policy term.
Q. What happens to NCB when transferring car insurance policies?
When transferring car insurance policies, you can transfer the accumulated NCB percentage from the previous policy to the new one, helping to continue enjoying the NCB benefits.
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