All You Need To Know About No Claim Bonus And How It Is Calculated

All You Need To Know About No Claim Bonus And How It Is Calculated

While there is a spike in the prices of the car, the car insurance company offers a unique proposition to reduce the yearly premiums, thanks to No Claim Bonus (NCB). Most policyholders are acquainted with the concept of NCB, but lack of proper understanding creates a subtle difference, leading to disillusionment at the time of policy renewal. In car insurance, No Claim Bonus can be considered as a reward given to the policyholder if only no claim was made in the preceding years.

NCB insurance is like a reward program where a policyholder can earn up to a discount range from 20-50% on the premium payable. It can only be earned if no claim is made during the given period. The No Claim Bonus insurance program is an initiative that is taken to increase the awareness of safe driving. However, one must note that NCB insurance is applicable during the time of insurance renewal. For having a better insight into NCB insurance, you can go through the guide provided below.

NCB is Mostly Associated With the Policyholder than The Car

One of the salient features of NCB insurance is that its coverage is correlated with the policyholder than the car. The policyholder is entitled to the NCB insurance coverage even if an individual replaces their old car with a new one in case of a change in the car insurance plan. The process of NCB insurance transfer is very simple and doesn’t involve a complicated calculation. The only exception to the NCB insurance transfer policy is that it is non-transferable in case of the death of the policyholder.

Benefits of NCB car Insurance

  • Creating awareness of Safe Driving: The NCB insurance plan is designed to increase the awareness of safe driving among the policyholder.
  • Provides coverage to you and not to your car: The no-claim insurance bonus concerns you and not your car. The insurance provides coverage if the policyholder has made no claim during the period of the NCB policy.
  • Saves Insurance Premium: It provides discounts on no claim bonus. The discount ranges from 20 – 50% on your annual car insurance premium.
  • Easy Transfer Process: The transfer process of the NCB car insurance is very easy and hassle-free. It is applicable even if one changes their car insurance policy plan.

How to Calculate No Claim Bonus?

Calculating a No Claim Bonus insurance is not any big issue. There are a lot of car insurance companies that offer online access for the calculation of the No Claim Bonus. While calculating the NCB insurance, the following things should be taken into consideration:

  • The calculation can be done online by using the No Claim Bonus calculator that is offered by different car insurance companies.
  • NCB insurance is applicable only from the second year of your car insurance policy.
  • The discount on the NCB insurance policy ranges from 20 – 50% and the return depends upon the claim made by the policyholder.

The discount range for the calculation of the NCB car insurance is given below:

Claim Free Years No Claim Bonus discounts
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%

How to Transfer NCB to a New Car Insurance Plan?

The process of transferring the NCB insurance policy varies depending upon whether you are opting to transfer it via offline mode or via online mode. In case of buying your car insurance policy via offline mode, the policyholder needs to submit the buyer-seller agreement along with a letter requesting the transfer of NCB insurance.

However, if you plan to buy a new car insurance plan in an online mode, then the process is hassle-free and involves less paperwork. The policyholder needs to provide the right NCB with the old policy number. The insurance company will take care of the rest of the process.

Documents Required for Transfer of NCB

In order to transfer the NCB insurance from one insurance plan to another, the following documents are required which are given below:

  • Photocopy of the documents that you have received from the sale of the old car.
  • Photocopy of the previous car insurance policy is required.
  • Photocopy of the documents of the new car.

Once you submit the required documents properly, the no claim bonus will get transferred to your new car. Moreover, the customer can avail the discount benefit based on the existing NCB certificate on the insurance premium for the new car.

The Bottom Line

Among some of the attractive car insurance, NCB is an exceptional feature that helps in the reduction of premium. Having an NCB insurance is always positive for the policyholder, but one must be aware of the fact that the maximum claim discount is 50%. Once the individual has used this facility, they have to wait until the next renewal period. Moreover, always be careful during choosing the NCB insurance plan to get proper coverage facilities.

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