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No Claim Bonus (NCB) in Car Insurance and How it is Calculated?

In India, the number of four-wheelers is increasing at a rapid rate. But before you buy a car in India, you must know that motor vehicle insurance is compulsory in India and you have to avail it while buying a car. But the good news is, that most insurance providers provide policyholders with NCB benefits.

Now, most people in India are unaware of what NCB even means in the first place! So, read to know everything about it.

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What is NCB in Car Insurance?

NCB stands for ‘No Claim Bonus’. It’s actually a kind of reward that the car insurance providers provide to their customers when they do not file any claim in a policy year. In this reward, the insured person gets a discount on their premium when they renew their insurance in the next policy year.

NCB Full Form in Car Insurance

The NCB full form in car insurance is “No Claim Bonus”. As the name suggests, it is a bonus you receive for not filing any claim. 

NCB Meaning in Car Insurance

You drive safely for a year and make no claims during the policy period. Your policy period is about to end and it is time for insurance renewal. Your insurer acknowledges the fact that you are a safe driver and wants to reward you for not raising a claim. Thus, the insurer offers you a discount while renewing your policy. This reward is termed as a bike and car insurance No Claim Bonus.

How NCB in Car Insurance Works?

While everything else around you rise in price, your car insurance gives you a special benefit by giving you the choice to reduce your car insurance premium. 

It works almost like a rewards system. You start by gaining a 20% NCB discount if you haven’t made any claims for your first policy year. Consequently, you keep gaining an additional 5% from your second consecutive year of making no claims.  

This can go about a reduction of 50% in your sixth consecutive year. Long story short, the better driver you are, the better you protect your car - the better it works out for you in the long run.

How is NCB Calculated in Car Insurance?

After understanding what an NCB policy is in insurance terms, the next big question is – how much the no claim bonus for car insurance is.

Using a No Claim Bonus calculator is not that difficult. In fact, many insurance companies give you access to a No Claim Bonus Calculator on their websites that will help you calculate your No Claim Bonus amount accordingly. The same usually starts from the second year of your respective policy.

According to the present norm, NCB in India starts with 20% and goes up to 50% in the sixth year. No Claim Bonus percentage for any four-wheeler is generally calculated in the following way.

NCB Calculation for Car Insurance

Claim Free Years No Claim Bonus
After 1 year 20%
After 2 years 25%
After 3 years 35%
After 4 years 45%
After 5 years 50%

Let us understand with an example:

On the first renewal, the policyholder is entitled to a 20% discount if he has not made a claim. In the second renewal, he will receive a 25% discount if he has not made a claim. 

Therefore, his premium would be lesser every year, and he would have saved his money, if he had not made a claim during his policy tenure.

Thus, the money saved on the Own Damage premium increases annually as the discount increases annually, to a maximum of 50%, till there are zero claims.  

When is a No Claim Bonus in Car Insurance Applied?

NCB (No Claim Bonus) is a discount applied to your existing car insurance premium. NCB is typically applied when doing your car insurance policy renewal. It can be applied with the Comprehensive policy and Own Damage plan, but not the Third-party policy.

Is It a Good Idea to Make Small Claims and Lose No Claim Bonus?

No! In case you’ve got into a minor accident or are planning to use your car insurance for a small tyre burst, you could instead skip the claim and pay for its repairs yourself (only if you think it’s feasible!) and you can go a year without any claims and therefore gain a No Claims Bonus during your car insurance renewal. 

Benefits of NCB in Car Insurance

1. Gives You Positive Rewards

The NCB is nothing, but a means to reward you for being a good and responsible driver and car owner.

2. Connected to You and Not Your Car

NCB is connected to you as an individual and not your car. This means, no matter which car you have- as long as you have been renewing your car policies before its expiry date, you can continue to benefit from a NO Claim Bonus for your car insurance.

3. Save on Car Insurance Premium

The benefit everyone loves! Discounts! A No Claim Bonus will save you at least 20% of your annual car insurance premium.

4. Easily Transferable

In situations where you’re either changing your insurer or car, the process to transfer of your NCB is simple and hassle-free. The only thing you need to ensure is, to shift your policy before your current one already expires.

How to Retain NCB Even After Filing a Claim?

Yes, there is a way to retain your NCB even after you have filed for a claim in a policy year – by opting for NCB Protection Add-on. This add-on is an optional cover that ensures your bonus doesn’t reset if you file a necessary claim. 

Please note that since this is an optional cover, you can buy it only with a comprehensive car insurance policy or a standalone own-damage cover by paying an additional premium. Also, not every insurance company offers this benefit, so confirm with your insurer beforehand.

NCB Protection Cover Exclusions

Following are the cases where this add-on will not be applicable:

  • When you have exceeded the number of claims allowed under the NCB Protection add-on.
  • When any fraudulent OD claims have been made or there is any discrepancy in the facts regarding a claim. 
  • The NCB will drop to 0% if you haven’t renewed the car insurance policy within 90 days of the expiry or stipulated date.
  • If you try to include or remove the NCB Protection cover mid-term.
  • Your car must be repaired in the insurance company’s network garage.

Important Things to Know about No Claim Bonus in Car Insurance

When is NCB Cancelled?

It is seen that NCB is very beneficial. As long as you do not claim, you will continue to get the benefit of NCB protection.

But if you have to claim for any reason during a policy year then you will not get the benefit of NCB in the next policy year.

It is important to know that if you do not renew your existing insurance policy within 90 days from the date of expiry then your NCB will be terminated, and you will not get the benefit of No Claims Bonus anymore. Hence you should always renew your policy timely.

Is NCB Applicable to Third Party Insurance?

No! Policyholders can avail of the benefit of No Claim Bonus only with the Comprehensive policy or Own Damage cover. It means you will NOT get any NCB discount against your car insurance if you own only a third-party cover.

However, making a third-party claim won’t impact your accrued NCB at the time of renewing your policy.

How to get NCB Certificate Online?

At the time of buying an insurance policy, the policyholder is provided with an NCB certificate, and it now depends on the policyholder whether he makes any claims or not in the policy year. If he claims, then he will not be entitled to the NCB benefit for the next year but if he doesn't claim for the entire year, he will be eligible for the NCB benefit.

To get a No Claim Bonus (NCB) certificate, the policyholder can contact the insurance provider and request one. For that he needs to provide your policy number and personal and vehicle details. After verifying the details, the insurer will issue the NCB certificate.

What is Previous NCB in Insurance?

Wonder what happens if you haven’t made any claims yet and decide to sell your car in the middle of the year or, in another case buy another car?

If you buy an old car from a dealer or any third-party and if the car is eligible for NCB then you can apply for a no claim bonus transfer. In this case, all that you have to do is, write to your insurance provider informing them about the sale of your old car and request them to transfer your NCB to the new car.  
 
In case you’re now buying a new car insurance policy with Digit, all you have to do is mention your current NCB and the name and policy number of your previous insurer (if you’re buying a new car policy with us for the first time) and we’ll take care of the rest.

What to Do with the NCB on Your Existing Policy When Selling the Car?

If you have NCB on your existing policy and decide to sell your car in the middle of the year or, in another case, buy another car, there are two cases you need to know:

  1. If you buy an old car from a dealer or any third-party and if you are eligible for NCB, then you can apply for a no claim bonus transfer. In this case, all that you have to do is write to your insurance provider informing them about the sale of your old car and request them to transfer your NCB to the new car.  
  2. In case you’re now buying a new car insurance policy with Digit, all you have to do is mention your current NCB and the name and policy number of your previous insurer (if you’re buying a new car policy with us for the first time) and we’ll take care of the rest.

How to Claim Your No Claim Bonus for a New Vehicle Insurance Policy?

This depends on whether you’re buying your new car insurance online or through an agent, or offline.  

In case you are buying your new car insurance policy offline or via an agent, you will need to transfer your No Claim Bonus by submitting your buyer-seller agreement- Forms 29 and 30 along with a letter requesting the transfer of your NCB from your existing insurance company.

The respective insurer will then issue an NCB certificate which you’ll need to submit to your new car insurance company.  

However, if you’re going to buy your new car insurance online, you don’t need to do any of this. All you need to do is declare the right NCB and old policy number and name of the insurer and your new insurance company will manage the rest of the process.

What are the Documents Required for NCB Transfer?

You have to provide the following documents along with the application:

  • Copy of delivery note that you’ve received for the sale of the old car
  • Copy of insurance policy of the old car
  • Copy of the booking form that you received for purchasing the car
  • Transfer application
  • Buyer-seller agreement (Forms 29 & 30)
  • Copy of transferring the old RC if you’re selling your old car
  • NCB certificate from the insurer

After the submission of the above documents, no claim bonus will be transferred to the new car. Based on the existing NCB certificate the customer can avail the benefit of the discount on the insurance premium for the new car.

What Happens to NCB if the Vehicle is in an Accident or Stolen?

If your car gets in an accident or gets stolen, your NCB discount is completely or partially lost if your insurer has to pay out – even if it's not your fault. 

Whether it’s a case of accident or theft, your NCB will be reset to zero unless most damage expenses are recovered. For example, if you were hit by a third-party and they agree it was their fault, your insurer can recover all the costs from them, thus saving your NCB.

FAQs about No Claim Bonus in Car Insurance

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