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What is No Claim Bonus?
Jul 14, 2010

What is NCB and How Does it Affect My Motor Insurance Premium?

What is NCB and under what circumstances is it applicable and how does it benefit the vehicle owner? NCB is short for No Claim Bonus. It is given to the owner of the vehicle, who is also the policy holder, if he/she has not filed any claim in the previous policy year. The NCB reflects as a percentage discount on the insurance premium for the vehicle owner. If you have NCB, then you can avail a discount ranging from 20-50% on the Own Damage Premium. NCB helps you save on your 4 wheeler insurance  premium (OD Premium). The chart here illustrates the discount on Own Damage (OD) Premium based on the number of consecutive years, for which no claim was filed by you.  
20% discount on OD Premium No claim made or pending during the preceding full year of insurance
25% discount on OD Premium No claim made or pending during the preceding 2 consecutive years of insurance
35% discount on OD Premium No claim made or pending during the preceding 3 consecutive years of insurance
45% discount on OD Premium No claim made or pending during the preceding 4 consecutive years of insurance
50% discount on OD Premium No claim made or pending during the preceding 5 consecutive years of insurance
    How does NCB affect my premium? The No Claim Bonus is a great way to progressively reduce your premium. For example, the table below shows the premium payable towards a Maruti Wagon R costing INR 3.6 lakh, over six years in following scenarios:
  • Scenario 1:When no claim is made and the No Claim Bonus is earned, as applicable
  • Scenario 2:When a claim is made every year
IDV Scenario 1 (With NCB) Scenario 2 (Without NCB)
Year Value in INR NCB % Premium NCB % Premium
Year 1 3,60,000 0 11,257 0 11,257
Year 2 3,00,000 20 9,006 0 11,257
Year 3 2,50,000 25 7,036 0 9,771
Year 4 2,20,000 35 5,081 0 9,287
Year 5 2,00,000 45 3,784 0 9,068
Year 6 1,80,000 50 2,814 0 8,443
  If you are avail a No Claim Bonus on any vehicle, you can get it transferred to a new vehicle of the same type (four-wheeler to four-wheeler, two-wheeler to two-wheeler). This way, you can earn discount up to 50% on the first premium payable (when it is the highest) for your car insurance as well as 2 wheeler insurance policy on your new vehicle. Let’s consider an example: Suppose you buy a new Honda City, costing INR 7.7 lakh. In normal circumstances, let the Own Damage Premium payable towards its insurance for the first year be INR 25,279. However, if you were to transfer the 50% No Claim Bonus (the best case scenario) of your old vehicle to the Honda City, you would pay INR 12,639 as Own Damage Premium in the first year, thus saving a 50% of the premium cost. Can my No Claim Bonus be forfeited? If yes, then why? Your NCB can be forfeited in the following cases:
  • If the claim is made during a policy period, then you will not be eligible for any NCB in the corresponding year.
  • If there is a break in the insurance period for more than 90 days, i.e. if you do not insure within 90 days of the date of expiry on your existing policy, then you won’t earn NCB.
  Can I transfer the NCB from an old vehicle to a new vehicle? You can transfer the NCB from your old vehicle to a new one only if it is of the same class and type as your previous vehicle. To transfer, keep the following points in mind:
  • When you sell your old vehicle ensure that ownership is transferred and make a photocopy of the new entry in the RC book for insurance purposes.
  • Obtain the NCB certificate. Forward a copy of the delivery note to your insurance company and ask for the NCB certificate or holding letter. This letter is valid for three years.
  • When you buy a new vehicle get the NCB transferred to your new vehicle policy.
  Please note some of the important points about NCB
  • NCB becomes Nil in case you file a claim
  • NCB can be transferred to the new vehicle in case of substitution of vehicle of the same class
  • Validity – 90 days from the date of expiry of the policy
  • NCB can be utilized within 3 years (where the existing vehicle is sold and a new vehicle is purchased)
  • NCB recovery can be done in case of a name transfer
  Know more about the steps to avail NCB in bike insurance car insurance policies during renewal for better deals.

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