Car insurance is one of the few requirements that needs to be complied with by all car owners, other than registration and PUC. While it is a legal requirement to have a car insurance policy, it is also critical to select the right type of insurance cover.
Car insurance plans are available in two types—a third-party plan and a comprehensive policy. Your choice of plan can be either, but third-party coverage is the bare minimum requirement. With buying a third party vehicle insurance online
, you can conveniently ensure protection against legal liabilities arising due to an accident. Comprehensive plan is an alternative to such a third-party car insurance policy and includes much wider coverage. In addition, a comprehensive plan also includes the no-claim bonus, which is a benefit that lowers the insurance premium at the time of renewal.
What is no-claim bonus in car insurance?
No-claim bonus, or as popularly known as NCB, is a markdown offered by the insurer at the time of renewal if no claims are made during the policy period. To simplify, it is a benefit by way of concession in insurance premium that is offered by the insurance company. Such a no-claim bonus can be accumulated over a period to avail a higher reduction in premium amount. Moreover, this no-claim bonus is linked to you, the policyholder, and not the vehicle. Thus, any sale or transfer of your car enables you to carry forward such benefits to your new car.
The no-claim bonus is awarded as a percentage of the own-damage premium, and thus, comprehensive plans and standalone own-damage plans are the only policies in which you can receive the no-claim bonus. Further, the no-claim bonus starts at 20% and scales all the way to 50% for every consecutive claim-free policy year. Any claim made during the period resets the NCB.
How can you utilise the no-claim bonus to lower the premium of your new car?
As discussed above, the no-claim bonus is linked to the policyholder and not the insured vehicle. So, anytime you sell your car, you need not make a car insurance transfer for the NCB component. Only the third party car insurance component must be transferred within the stipulated period.
To retain the NCB, you, as the policyholder must obtain an NCB transfer certificate. Such a certificate is also known as an NCB retention letter, wherein you are required to submit forms 29 and 30 along with relevant sale documents of your car. When issued by your insurance company, the certificate is valid for a period of three years and can be used to lower the premium for your next car insurance
purchase. Please visit the official website of IRDAI for further details.
There are two possible scenarios in which you can utilise the no-claim bonus to lower the premiums. First, by way of using these NCB benefits for your new car after the sale of the old car. Here, you can obtain an NCB transfer certificate and use it to lower the premium for your new car. Another scenario is where you buy another car whilst retaining your old car. In such a situation, you can either gift or sell the old car to one of your family members and use the accumulated NCB to lower the insurance premium of your new car.
With these benefits of NCB, it is hard to miss this feature in comprehensive car insurance plans. Thus, make sure to use the accrued NCB at the time of car insurance renewal online
. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.