The number of four-wheelers on Indian roads is increasing at an exponential rate.
With this rise, there is also an increase in the instances of car accidents, which is one of the reasons why you should have an adequate vehicle insurance policy for your car.
An insurance policy for your car can help you deal with the financial ramifications if your vehicle is damaged or involved in an accident with a third party. You can buy online car insurance from the comfort of your home. It is possible to compare car insurance policies by directly visiting your preferred insurer’s website. It is worth noting here that four-wheeler insurance companies also reward you with a ‘No-Claim Bonus’ if you don’t file a claim during a policy year.
What is NCB in Insurance?
A No-claim Bonus (NCB) is a bonus offered on the car insurance premium to the policyholders for every claim-free year. Suppose you have purchased four-wheeler insurance and do not file an insurance claim for an entire year, the insurance company rewards you by offering you a discount on the premium amount during the renewal of the policy. The percentage of this discount keeps rising for all the years you do not file a car insurance claim.
Here is the NCB percentage for all the years you don’t file a claim:
- For the 1st claim-free year: the NCB percentage is 20%;
- For the 2nd successive claim-free year, the NCB percentage is 25%;
- For the 3rd successive claim-free year, the NCB percentage is 35%;
- For the 4th successive claim-free year, the NCB percentage is 45%;
- For the 5th successive claim-free year, the NCB percentage is 50%.
Therefore, if you do not file a car insurance claim for five consecutive years, you are eligible to get a 50 percent discount on your policy premium amount. The discount you earn for all the years you don’t file a claim is applied when you renew your policy. Therefore, to earn the benefit of your accumulated NCB, it is important to renew your four-wheeler insurance policy on time.
For instance, if you have purchased a car insurance policy with a premium amount of ₹15,000, you will get a discount of 20 percent on the premium amount while renewing the policy if you haven’t filed a claim during the first year of the plan. With this discount, your premium amount is reduced to ₹12,000 in the second year.
What is more, is that your car insurance premium amount can go from ₹15,000 to ₹7,500 if you don’t file a claim for five consecutive years.
When is Car Insurance No-Claim Bonus not Applicable?
The car insurance NCB will not be applicable in the situations listed below:
- If you file a claim while the policy is active;
- If you do not renew your policy within 90 days of the expiration date of the existing policy;
Therefore, it is important to be mindful of the aforementioned situations whilst filling out the no-claim bonus details. Along with this, there are also certain things you should know about your car insurance no claim bonus.
Things You Should Be Mindful Of In Your Car Insurance NCB
You retain your NCB when you buy a new car: The NCB reward is provided to the owner of the vehicle and not the vehicle itself. Therefore, if you’ve earned an NCB on car insurance and decide to purchase a new car, you can transfer the NCB discount to the insurance policy on your new car.
However, the NCB cannot be transferred from one person to another unless the car’s owner passes away and the car is left for the owner’s heir.
The NCB isn’t calculated on the entire insurance premium amount: The NCB discount is not applicable for the third-party insurance premium component of your car insurance premium.
Generally, the third-party liability insurance premium takes up around 20% of the entire premium amount, and the NCB is calculated on the premium amount after deducting the third-party premium amount.
You must not declare an incorrect NCB: It is important that you are careful while filing the NCB bonus for your car insurance policy. This is because you could face serious repercussions if you misquote your car insurance NCB. Insurance companies check the NCB for a policyholder during car insurance renewal.
If you have declared the NCB incorrectly, your insurance company may reject your car insurance claim and cancel your car insurance policy. It is, thus, important to declare the correct information, as the wrong information may lead to you missing out on the benefits of your car insurance NCB.
Conclusion
Your car insurance no-claim bonus can help you reduce the premium amount on your insurance policy by up to 50 percent if you do not file a car insurance claim for five consecutive years. You can also transfer the bonus to a new car. However, it is important to provide the correct NCB information while purchasing or renewing a four-wheeler insurance policy.
