No Claim Bonus

No Claim Bonus

No Claim Bonus (NCB) is a reward given to the policyholder by the insurance company for not making any claims during the policy period. It is a discount on the premium amount payable for the next policy period and is one of the most significant benefits of having car insurance. In this article, we will discuss No Claim Bonus in detail and its importance in car insurance policies.

What is No Claim Bonus (NCB)?

No Claim Bonus is a discount given to the policyholder by the insurance company for not making any claims during the policy period. It is a reward for safe driving and maintaining the car in good condition. The NCB is a percentage of the own damage premium, which can be availed at the time of policy renewal.

How is No Claim Bonus calculated?

The NCB percentage increases for every consecutive claim-free year, as per the following table:

No. of Consecutive Claim-Free Years NCB Percentage 1 20% 2 25% 3 35% 4 45% 5 or more 50%

The maximum NCB percentage that can be availed is 50% after five consecutive claim-free years. In case of a claim during the policy period, the NCB becomes zero for the next policy period.

Importance of No Claim Bonus in Car Insurance Policies

1. Premium Discount: NCB is a discount on the premium amount payable for the next policy period. The discount increases for every consecutive claim-free year, up to a maximum of 50%. Therefore, it is essential to maintain a claim-free record to avail of the maximum NCB.
2. Transferability: NCB is transferable to another vehicle or insurance company. Therefore, if the policyholder purchases a new car or switches to a different insurance company, the NCB can be transferred, provided there is no break in the policy period.
3. Additional Cover: NCB can be used to purchase additional covers or riders for the car insurance policy, such as zero depreciation cover, engine protection cover, etc. These additional covers can provide comprehensive protection to the vehicle and enhance the coverage.

Conclusion

No Claim Bonus (NCB) is a significant benefit of having car insurance. It is a reward given by the insurance company to the policyholder for maintaining a claim-free record. NCB is a discount on the premium amount payable for the next policy period, which increases for every consecutive claim-free year. The maximum NCB percentage that can be availed is 50% after five consecutive claim-free years. NCB is transferable to another vehicle or insurance company and can be used to purchase additional covers or riders for the car insurance policy. It is always advisable to maintain a claim-free record and avail of the maximum NCB to reduce the premium amount and enhance the coverage.