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If you own a car, then you must be owning a car insurance policy; one that protects you from legal and financial hassles in case of any damages incurred to yourself, your car or those incurred by a third party individual or vehicle. In case of an unforeseen circumstance like an accident, you need to inform your insurance provider and make a claim. Your insurance provider bears the burden of financial responsibilities that arise due to an accident. Also, you pay an annual premium every year to renew your car insurance. But what happens if you have an insurance policy but you make no claims on it, year after year? You become eligible for a no claims bonus. Here???s everything there is to know about car insurance no claim bonus or NCB.
Car insurance providers offer a reward or an incentive to drivers for following traffic regulations and safe driving. This reward is essentially a bonus that is provided for every year in which an individual does not make a claim on his insurance policy and is known as a no-claims bonus. The no claims bonus is offered when one renews his/her insurance policy. The amount payable is determined at the time of policy renewal by subtracting the no-claims bonus discount from the total premium payable. Let???s understand the calculation of no claims bonus.
If you have a valid car insurance policy and have not made any claim in a given financial year your insurance provider offers you a discount on your insurance premium when you renew your policy in the following year. The no claims bonus reward scheme typically begins in the second year from when you first purchase your policy i.e. at the first renewal of the insurance policy. As the name suggests, is only applicable if you make no insurance claims
Here???s an example to help understand how to calculate NCB for car insurance:
Let???s say you own a Toyota Etios car that you have insured. You are paying an annual insurance premium of ???20,000 and you have not made any claims in the first year. In this case, your insurance provider will offer you a 20% discount on your insurance premium for not making any claims i.e., you would be paying a premium of ???16,000 if you renew your insurance policy before it lapses. As years go by, your premium reduces further, until by the sixth year of policy renewal, when you become eligible for a 50% discount on premiums, so long as no claims are made at all during this time.
|Age of the Car insurance Policy||No claims bonus percentage|
|After 1 claim-free year||20% off on premiums|
|After 2 consecutive years of no claims||25% off on premiums|
|After 3 consecutive years of no claims||35% off on premiums|
|After 4 consecutive years of no claims||45% off on premiums|
|After 5 consecutive years of no claims||50% off on premiums|
According to the current regulations in India, the no claims bonus begins with a 20% discount on your insurance policy, with a maximum discount of 50% that can be availed for not making claims for five years in a row.
Now that you know what is NCB in car insurance, here are a few things to remember
The NCB belongs to the policy holder, not his car: NCB is linked to the policy holder and not his car. So, if you sell your old car and buy a new one, you can easily transfer your NCB to the new car. You can make this transfer either by opting for the same insurance provider or by choosing a new one altogether. The procedure for the transfer of NCB is quite simple where you just have to provide proof of no claims made.
NCB can be availed during policy renewal: NCB discount can be claimed only when you renew your insurance policy. You are not eligible for any discount when you purchase insurance for the first time.
NCB does not apply to third party liability cover: NCB car insurance applies on to the own damage part of the insurance premium. The bonus cannot be availed on third party insurance.
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