Login

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

According to the 1988 Motor Vehicle Act, vehicle insurance is mandatory for it to be fit for driving on Indian roads.
Calendar-icon

By Carandbike Team

clock-icon

1 mins read

Calendar-icon

Published on February 21, 2022

Follow us on

google-news-iconWhatsapp-icon
Story

Highlights

    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.

    uurtu94g

    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.

    1hkbns6g

    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.

    vnpma19

    Photo Credit: www.myinsuranceclub.com

    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.

    Calendar-icon

    Last Updated on February 21, 2022


    Stay updated with automotive news and reviews right at your fingertips through carandbike.com's WhatsApp Channel.

    Great Deals on Used Cars

    View All Used Cars

    Explore More