What You Need to Know About No Claim Bonus in Vehicle Insurance

No Claim Bonus or NCB can typically be defined as the privilege given by the insurance company to their comprehensive insurance customers. It is the discount bonus you get when you renew your comprehensive insurance. As its name suggests, the NCB privilege is applicable only in cases where the customer has not claimed their insurance in the year for which the insurance was valid.

Since NCB is dependent on the value of insurance premium solely, insurance companies compute it as a percentage of the insurance premium amount. Apart from this, the NCB percentage increases when your number of claim-free years go up. At the end of the first claim-free year, the NCB on next insurance premium is 20%. For your next consecutive claim-free year, NCB increases to 25%. Third and fourth consecutive claim-free years attract 35% and 45% NCB respectively. For your fifth consecutive year without any claim, the insurance company offers an NCB of 50%, which is the highest NCB you can expect from your insurance policy. It must be noted that you must maintain claim-free years hereafter to maintain this 50% NCB. Any claim in these years will get your NCB to zero and the cycle will repeat itself.

This type of arrangement is in place to incentivize the insurance holder for saving insurance company's money by not claiming insurance year after year. It must be noted that No Claim Bonus is offered only when you renew your insurance policy withing 90 days of expiry of your previous insurance policy. Unlike your vehicular insurance, NCB does not belong to the vehicle but its owner. When you sell your vehicle, your NCB does not go away with the vehicle or end with a certain company when you switch your insurance but stays with you and can be transferred to your new vehicle and insurance policy. Thus, as a used vehicle buyer, you do not get any added NCB when you transfer the insurance of your vehicle.

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In recent times, many insurance companies have started giving add-on NCB protect covers which let you claim your insurance. Some insurance companies provide this cover upto a certain claim amount while some provide this insurance cover for your first claim.

It must also be noted that No Claim Bonus is applicable only if your vehicle is covered by a comprehensive insurance. You do not get any NCB on your vehicle's third party insurance or collision insurance.