NCB Protector Cover

You can opt for a variety of add-on covers with your motor insurance policy. Add-ons provide extra protection to your vehicle. The Engine Protector add-on, for example, offers financial protection against any damage caused to your vehicle’s engine. The Roadside Assistance cover is another add-on that provides on-road assistance in case your vehicle breaks down in the middle of the road.

In this article,we will discuss very popular add-on cover available with motor insurance policies - the No Claim Bonus Protector add-on.

But before we get into how this add-on works, and how it can benefit you, let’s first take a look at what a No Claim Bonus is.

What Is A No Claim Bonus?

No Claim Bonus is a reward that the insurance company gives you for not making a claim in a policy year. It is a discount you get on the own damage premium amount at the time of renewing your motor insurance plan.

Benefits of No-Claim Bonus

How Does The No Claim Bonus Work?

As per the rules, the No Claim Bonus discount percentage ranges from 20% to 50%, based on the number of claim-free years. It increases cumulatively with each claim-free year until you reach five consecutive claim-free years, at which point the No Claim Bonus gets capped at 50%.

So, for the first claim-free year, the insurance company will give you a premium discount of 20%. For two continuous claim-free years, you’ll be eligible for a discount of 25%, and so on.

Here’s a table that explains how the No Claim Bonus increases with the number of claim-free years.

Let’s understand this better with the help of Rehaan’s example.

No. of claim-free years No Claim Bonus Discount %

1

20%

2

25%

3

35%

4

45%

5

50%

Rehaan buys a motor insurance policy in the year 2020. The own damage premium under his policy is Rs. 10,000. He doesn’t make any claims in the first year. So, the insurer gives him a premium discount of 20% on the own damage premium when he renews his policy. Rehaan doesn’t make a claim in the second year as well. Hence, he’s eligible for a 25% discount on his policy’s own damage premium.

The No Claim Bonus discount under Rehaan’s policy will keep on increasing cumulatively with every claim-free year. And, after five consecutive claim-free years, the No Claim Bonus discount will get capped at 50%.

Can You Lose The No Claim Bonus Discount?

Yes, you can lose your No Claim Bonus discount if -

  • You don’t renew your policy within 90 days of the expiry date.
  • You make a claim in a policy year.

Let’s take Rehaan’s example again.

In the third year, say Rehaan’s car gets damaged in an accident and hence, he takes a claim. In this case, Rehaan will lose all his premium discounts, and the No Claim Bonus under his policy will reset to 0%. Meaning, that when he renews his policy in the next year, he won't get any NCB discount on his own damage premium amount..

So, the No Claim Bonus discount will reset to 0% as soon as you make a claim - regardless of how many claim-free years you had in the past.

Is There A Way To Keep The No Claim Bonus Intact Even If You Make A Claim?

Yes, there is a way of every problem! You can keep the NCB discount intact even when a claim is made by opting for the No Claim Bonus Protector add-on with your base plan.

What is the No Claim Bonus Protector add-on? How does it work? Let’s see!

No-Claim Bonus Protector Add-on to keep the NCB Bonus
What is No-Claim Bonus Protector Add-on

What Is The No Claim Bonus Protector Add-on?

The No Claim Bonus Protector add-on, as the name suggests, ensures that your No Claim Bonus stays protected despite raising a claim in a policy year. You can buy the No Claim Bonus Protector add-on with your base motor insurance policy by paying an additional premium amount.

Let’s Understand How This Add-On Works With The Help Of An Example.

Suppose you have a motor insurance policy, and you have not made any claims in the last five years. So, a No Claim Bonus of 50% has been accumulated under your policy. Now, let's say your car gets severely damaged in an accident in the sixth year. So, you file a claim from the insurance company.

Let’s take a look at how the No Claim Bonus under your policy will be affected with and without the No Claim Bonus Protector add-on cover.

SCENARIO 1:

WITHOUT THE NO CLAIM BONUS PROTECTION ADD-ON
Renewal Own Damage Premium 20,000

No Claim Bonus % before the claim is made

50%

No Claim Bonus % before the claim is made

0%

SCENARIO 2:

WITH THE NO CLAIM BONUS PROTECTION ADD-ON
Renewal Own Damage Premium 20,000

No Claim Bonus % before the claim is made

50%

No Claim Bonus % after the claim is made

50%

If you opt for the No Claim Bonus Protector add-on, you won’t lose the NCB discount even if you make a claim. The No Claim Bonus of 50% will remain intact under your policy. So, at the time of renewing the policy, you’ll have to pay the own damage premium of Rs. 10,000 (50% of 20,000) - along with third-party premiums and taxes.

Who Should Take The No Claim Bonus Protector Add-On Cover?

You should opt for the No Claim Bonus Protection add-on coverage if -

  • You want to keep the No Claim Bonus intact under your policy even if you make a claim.

  • You stay in an accident-prone area and are likely to make more claims.

  • You own an expensive car and want to protect the No Claim Bonus under your policy.

Important Points To Note

Here are some important things about the No Claim Bonus Protector add-on you should note -

  • The add-on is only available for a limited number of claims, as specified in the policy document. And it may differ from insurer to insurer.

  • If your policy lapses and is not renewed within 90 days, you will lose the No Claim Bonus discount - even if you’ve chosen the No Claim Bonus Protector add-on.

  • The No Claim Bonus Protector add-on will be useful only if you renew your motor insurance policy with the same insurance company. Because, the No Claim Bonus Protector add-on cannot be transferred if you shift your policy to another insurer.

So, that is all about the No Claim Bonus Protector add-on in motor insurance policies. Opting for the No Claim Bonus Protector add-on is an excellent way to ensure that the No Claim Bonus discount you’ve earned under your policy remains intact.

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