Don’t ever buy car insurance or two-wheeler/bike insurance without taking the benefit of your No Claim Bonus! It can give you a significant discount on your premium (as high as up to 50% on your Own Damage premium) and that surely makes it something one wouldn’t want to let go off! In fact, the No Claim Bonus is like a reward for you, the person owning/driving the vehicle and since you deserve it, make sure you grab it!
No Claim Bonus (NCB) – Who can claim it
No Claim Bonus is a reward to the owner (assumed as driver of the vehicle) for driving safe and not making a claim in immediate previously insured periods. So if you buy a car insurance or two-wheeler/bike insurance and have not made any claim during the entire period, you are eligible for a No Claim Bonus in the next year. No Claim Bonus is a discount calculated on the OD (Own Damage) part of the premium, i.e. not on the TP (Third Party) cover part. Let’s understand this in detail.
No Claim Bonus (NCB) – Discount Calculation
If your a buying Comprehensive Insurance (which we suggest you always should), your overall premium for car insurance is the sum of two parts – Own Damage premium and Third Party Cover (or Liability premium) which is mandatory. There is no fixed ratio between the 2 parts because there are multiple factors at play, but typically Own Damage (OD) premiums are about 60-90% of the overall premium. No Claim Bonus is a discount on the OD Premium, and that makes No Claim Bonus a great proposition.
No Claim Bonus (NCB) – Multiple Years
No Claim Bonus is not just limited to 1 year – it can go for 2, 3, 4 and even up to a maximum of 5 years continuously, i.e. if you bought a car insurance for the last 5 years continuously and did not make a single claim (Wow!) then you can claim No Claim Bonus for Car Insurance or Two-wheeler/Bike insurance up to 50%! Here’s how the discounts work.
No Claim Bonus (NCB) – Impact of Discount
NCB does not affect the OD Premium for just 1 year, but because of the compounding effect, it gives exponential savings over time. Here’s a example of the premium schedule of a Maruti car.
Over 6 years, one can save nearly Rs. 11,945 when claims are not made. In fact, as you go further, the savings will keep increasing because you continue to get 50% NCB. Do consider this benefit before you decide whether to make small claims for any damage you may incur.
No Claim Bonus (NCB) – When do you lose it
- When a claim is made, NCB is reset to 0 (zero) and in future years, the calculation of NCB as per above table starts all over again. e.g. if you have had no claim in the last 3 years, you will get a 35% NCB this year. However if you make a claim this year, then when you renew the car insurance policy again next year, your NCB is reset to 0.
- You can also lose your entire NCB if you do not renew your car insurance within 90 days of the previous policy having expired. Remember this is very important and can mean a significant loss, sometimes into 000’s of rupees.
No Claim Bonus (NCB) – When you sell your old car or buy a new car
NCB follows the owner/driver and not the car or bike/two-wheeler. So if you sell your car or bike/two-wheeler, the NCB is not transferred – it stays with you. NCB can be recovered when the sale is done. You can use the NCB again when you buy a new car or two-wheeler (in the same class, i.e. four-wheeler to four-wheeler, two-wheeler to two-wheeler) within the next 3 years. Bike and Car Insurance premiums are highest when the car is new. By transferring NCB from your old car/two-wheeler to your new vehicle, you can get a discount from 20% and 50% on the first premium payable (when it is the highest) on your new car or two-wheeler. Sometimes, this can mean an additional saving of nearly 2% on the entire value of the car or two-wheeler! Makes it really worth it, doesn’t it?
Transfer of No Claim Bonus to a new car
- When selling your old car/bike/two-wheeler ensure you transfer ownership through an endorsement in the RC Book. Retain a copy of the endorsed RC Book.
- Obtain the NCB certificate from the Insurance Company. Forward a copy of the delivery note to your insurance company and ask for the NCB Certificate or Holding Letter. The holding letter is valid for 3 years.
- When you buy a new vehicle of the same class (car/bike/two-wheeler as the case may be) you can use the Holding Letter to get the same % of No Claim Bonus transferred to your new insurance policy.
Finally, remember that No Claims Bonus is company-agnostic, i.e. it does not matter which company you take the insurance from – you can keep transferring it. All you need to do is take a No Claim certificate from the existing insurer for the current policy, and then use it when renewing your policy from any other company.
So make sure you make the most of NCB!