NCB Transfer In Motor Insurance

You would already be aware of how an insurer rewards you with a No Claim Bonus (NCB) every year when you don’t make a claim under your motor insurance policy. NCB is a discount which you get on your policy’s own damage premium amount at the time of renewal. The bonus remains intact as long as you keep renewing your policy on time, and don’t make any claims under your policy.

Now, what if you want to shift your policy to another insurance company? Or say you decide to sell your vehicle and buy a new one. Will you lose all the NCB discounts accumulated under the policy? Or is there a way to retain the NCB in both of these scenarios?

We’ll find out - but before that, let’s understand how the No Claim Bonus works under a motor insurance policy.

How Does The No Claim Bonus Work?

Each year when you don’t make a claim under your motor insurance policy, the No Claim Bonus discount increases cumulatively. The discount increases until you reach five consecutive claim-free years.

As per the rules, the NCB discount percentage varies from 20% to 50%,depending on the number of claim-free years under your policy.

Here’s a table to help you understand this better.

No. Of Claim-Free Years No Claim Bonus Discount %

1

20%

2

25%

3

35%

4

45%

5

50%

So, the NCB discount increases up to a maximum of 50%, after which, it gets capped. In case you make a claim under the policy, you will lose your NCB discount for the succeeding policy year.

Example:
Say Rajiv buys a motor insurance policy worth Rs. 2 Lakhs. He doesn’t make any claim under the policy during the initial six policy years. So, he earns an NCB discount of 50%.

Now, in the seventh year, his vehicle gets damaged in an accident, and he raises a claim under the policy. In this case, the No Claim Bonus under his plan will reset to 0%. Means that he’ll lose all the NCB discounts accumulated under his policy over all these years.

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Benefits Of No Claim Bonus In Motor Insurance

Here are the top 3 advantages of the no claim bonus in motor insurance plans -

  • Reward For Maintaining Your Vehicle

    You are eligible for the no claim bonus discount only if you don’t claim under your motor insurance policy. So, the No Claim Bonus is like a reward you get for taking good care of your vehicle, and for being careful and responsible driver.

  • Discount On Own Damage Premium

    Based on the number of claim-free years under your motor insurance policy, you can save around 20% to 50% on your own damage premium amount.

  • Is Connected To You

    The No Claim Bonus is connected to you - not your vehicle. So, if you sell your old vehicle and purchase a new one, the No Claim Bonus will remain intact. And, it can be applied to the newly-purchased vehicle.

Important Points To Note About NCB

Here are 3 important points you should note about the no claim bonus in motor insurance -

  • No Claim Bonus is only applicable for comprehensive motor insurance and standalone own damage policy - not for a third-party policy.

  • You will lose your NCB discounts if you make a claim in a policy year - unless you have opted for the NCB Protector add-on.

  • If you do not renew your motor insurance policy within 90 days of its expiry, you will lose your NCB discounts. To avoid this, ensure you renew your motor insurance plan on time.

Can The No claim Bonus Be Transferred?

The No Claim Bonus benefit is provided to the insured individual and not the vehicle. Hence, it is transferrable.

You can transfer the No Claim Bonus under two scenarios -

If you are shifting to another insurance company.

If you are planning to sell your old vehicle and buy a new one.

Let’s learn about both these scenarios in detail.

  • Transferring The NCB To Another Insurer

    You may want to shift to another insurance company because -

    You are not satisfied with the services of your current insurer, or

    There are certain features/ benefits you want to opt for, which are not available with your existing insurer.

    Now, while you're switching, here’s how you can transfer the NCB discount to the new insurance company -

    You'll have to inform the new insurer about the No Claim Bonus in your previous motor insurance policy.

    The new insurance company will verify the documents and then provide you with an NCB discount if you have not made any claim in the previous year.

    If the past insurer does not validate the same or respond, the insurers will check the NCB again, at the time of claim. If there is any discrepancy found at the time of claims, insurers have the right to reject them. Hence, ensure that the information being diclosed is transparent.

  • Transferring The NCB To A New Vehicle

    Here’s how you can transfer the NCB discount from your old vehicle to your newly purchased vehicle -

    You’ll have to request an NCB certificate from your previous insurance company.

    For this, your previous insurer may ask you to submit certain documents, such as -

    Form 29 and form 30

    Sales deed

    Your previous insurer will verify the documents and issue the NCB certificate, signifiying the NCB discount percentage you’re eligible to receive.

    When you’re purchasing an insurance policy for your new vehicle, you’ll have to submit this certificate to the new insurer.

    The new insurer, too, will verify the same and then offer you the NCB discount.

    Please note:

    The NCB certificate will only be valid for 3 years from the date of issue. This means that you can use the certificate to get the NCB discount for a new car that you may buy within 3 years of the date of certificate issuance.

    The documents you may have to submit to transfer the NCB may vary across insurers.

That is all about the transfer of No Claim Bonus in motor insurance. Hope this article helped you gain enough clarity on how you can transfer the No Claim Bonus accumulated under your motor insurance policy to another vehicle or another insurer.

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