No Claim Bonus

A motor insurance policy does more than just protect your vehicle. It rewards you for maintaining your vehicle, and for being careful and responsible. Yes, you read that right! It rewards you for not making a claim in a particular policy year.

How? In the form of a No Claim Bonus

No Claim Bonus

What Is A No Claim Bonus?

A No Claim Bonus is an incentive the insurance company gives you for not making a claim in a policy year. It is a discount that you can avail on the premium while renewing your motor insurance policy. Fewer damages mean fewer claims and greater NCB.

What Is A No Claim Bonus?

How Does It Work?

Claim-free Year No Claim Bonus Discount %
After 1st claim-free year 20%
After 2nd claim-free year 25%
After 3rd claim-free year 35%
After 4th claim-free year 45%
After 5th claim-free year 50%

So, the No Claim Bonus increases cumulatively with each claim-free year until you reach five consecutive claim-free years, at which point your NCB gets capped at 50%.

There’s A Catch…

Now, when you do make a claim under the motor insurance policy, the No Claim Bonus accumulated under the policy will reset to 0%. Suppose you’ve not made any claims under the policy for five consecutive years and earned a discount of 50% on the premium amount. 1-2 years later, say, you meet with an accident and damage your car. In this case, the No claim bonus you’ve earned will reset to 0%.

Benefits Of A No Claim Bonus

  • Reward For Maintaining Your Vehicle

    For every claim-free year you get a discount at the time of renewal of the policy. This means if you maintain your vehicle well, don’t let it suffer any damage, and make no claim during the previous policy tenure - you are eligible for a No Claim bonus.

  • Discount On Premium Amount

    You can save around 20% to 50% on your premium amounts if you don’t make claims under your motor insurance policy for five consecutive years.

  • Is Connected To You

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

Let’s understand in detail how transferring the No claim bonus to a new vehicle works.

Transferring The No Claim Bonus When You Buy A New
Vehicle

If you decide to sell your old vehicle and purchase a new vehicle, you can simply transfer the No Claim Bonus from the old vehicle to the new vehicle. How? All you need to do is inform the insurer about the sale of your old vehicle and request them for NCB transfer certificate to transfer the accumulated No Claim Bonus to the new vehicle.

You may have to submit some documents for transferring the NCB to your new vehicle, like -

New Registration Certificate

Sales Deed

Duly signed Form 29/ Form 30

Copy of insurance policy of old car

Please note, this list may vary across insurance companies.

Important Point To Note: No Claim Bonus Can Be Terminated

If you do not renew your existing insurance policy within 90 days from the date of expiry then your No Claim Bonus will expire, and you will not get the benefit of the No Claim Bonus anymore. So, remember to renew your motor insurance policy on time.

Summing up!

For each year you don’t make a claim, you get a discount on the premium amount of your motor insurance policy. You can earn a discount of around 20% to 50% in 5 years. As soon as a claim is made under a policy, the No claim bonus resets to 0% irrespective of the claim amount paid. Further, you can also transfer the No claim bonus if you’re planning to sell your old vehicle and purchase a new one.

Questions about Car Insurance

Have Questions about Car Insurance?

Insurance would be much easier for you after browsing the list below.

The minimum coverage you are required to have depends on the state you live in. However, most states require at least liability insurance.

This varies based on a number of factors, including your driving record, the type of car you drive, and the amount of coverage you choose

Liability insurance covers other people’s injury and damage to their property in an accident.

If you don't have car insurance and are involved in an accident, you could be held liable for any damages caused. You could also face fines and penalties as per your state law.

The best way to save money on car insurance is to explore online and compare rates from different insurers. You can also choose to increase your deductible or opt for lower coverage levels.

Collision insurance covers damages to your car in the event of an accident. It typically costs more than liability insurance, but it can be worth it if you have a newer car.

Comprehensive insurance covers damages to your car that are incurred due to activities like theft or vandalism and not by accidents. It typically costs more than collision insurance, but it can be worth it if you live in a high-crime area.

Rental car coverage is not always necessary, but it can be helpful if you plan to rent a car often. This coverage can help you to pay for any damages that occur to the rental car.

Uninsured motorist coverage protects you in the event that you are involved in an accident with a driver who does not have insurance. Underinsured motorist coverage protects you in the event that the other driver does have insurance, but their policy does not cover all of the damages.

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