NCB in Car Insurance

NCB in Car Insurance

If you’re new to the world of automotive insurance, you’re probably wondering what NCB is in insurance schemes. An NCB is a discount provided to automobile owners on their next premium for not claiming in the previous insured period. This discount on the premium can range from 20% – 50%.

Insurance companies save a lot of money if insurers refrain from claiming damages frequently, and this is the main reason why insurance companies reward insurers who do not have damage claims with a bonus.

What is NCB in Car Insurance?

NCB full form in insurance is No Claim Bonus in car insurance. If you’re wondering what NCB in auto insurance stands for, we’ll break it down for you.

No claim bonus meaning is:

This is a bonus provided to the insurer by the insurance company if no claim for damages is made by the insurer for any year of using the vehicle.

  • The bonus is most often a reduction in the insurance premium for the next year.
  • This NCB discount on car insurance can vary from 20% – 50%.
  • Since the No Claim Bonus in insurance is deemed void when a claim for damages is made, some insurance companies even offer a No Claim Bonus NCB Protection Add-On.
  • NCB is usually in place in comprehensive insurance plans and covers cars, autos, and other vehicles.

How Does NCB Work in Car Insurance?

Insurance companies earn more money when insurers drive their vehicles responsibly and don’t make any claims for damages. So, they reward insurers and drivers that do not make any insurance claims for the damage to their vehicles by giving them a discount on their next year’s insurance premium. This discount ranges from 20%-50% over about five years. The NCB insurance gets void in case a claim is made or the insurance premium is not renewed on time. NCB can also be transferred from one vehicle to another in case the policyholder’s name is the same.

What are the benefits of NCB in Four Wheeler’s insurance?

For most people, a car is always an emotional purchase, and getting into an accident that causes damage to the vehicle is the last thing on any owner’s mind. However, mistakes do happen and that’s why insurance companies help you by taking the hit in case your car meets with damages, as long as it is insured. Paying for claims repeatedly is not a profitable venture for insurance companies. Hence, they reward responsible and safe driving by offering a bonus every year for about five years for cars that do not claim any damages during those years. This bonus is often a discount on the insurance premium for every next year during the five years. The discount tends to range from 20% – 50%.

How is NCB calculated?

The protected No Claim Bonus is calculated from the second year of insuring the automobile. It comes into effect if the insurer hasn’t made any damage claim on the vehicle in the first year of insurance. Now, there is a 20% discount offered by the insurance company on the insurance premium for the second year. If you ƒdon’t make any claims in the second year, you get a 25 % discount for the third year, and so on until you’ve completed five years and reached a 50% discount.

How much is No Claim Bonus for car insurance for example: Let us take an example of a car costing 8 Lakh and a premium of INR 25,000 per year. Now if the owner maintains the vehicle without claiming any accident damages for the first year, the NCB can be claimed and a 20% discount will be applicable on the previous premium, of 25,000. The new premium payable in the second year would be INR 20,00.

Learn how to check no claim bonus for car insurance from the table below.

No of claim free years No Claim Bonus Percentage
During the first year of claim-free insurance renewal 20% NCB discount on premium
During the second year claim-free insurance renewal 25% NCB discount on premium
During the third year claim-free insurance renewal 35% NCB discount on premium
During the fourth year claim-free insurance renewal 45% NCB discount on premium
During the fifth year claim-free insurance renewal 50% NCB discount on premium

This table contains the discounts offered under NCB on premiums as set by IRDA.

What are the important things to know about NCB in insurance?

  • The most important thing to know about NCB in insurance is that you can claim an NCB bonus only if you do not claim any damages for the first year.
  • Another important thing to note about NCB is that it is valid only if the car insurance has been renewed within 90 days of expiry, failing which NCB will be void.
  • The bonus when no claim has been made is given in the form of a discount on the next year’s insurance premium.
  • You can also protect or save your NCB by opting for an NCB Protector plan from your insurance company. This way, they will allow you to claim damages once without affecting your NCB, thanks to the ncb protection in car insurance.
  • NCB car insurance can extend for a period of up to five years, with a maximum discount percentage of 50%.
  • NCB can be transferred across vehicles as long as the policyholder is the same.
  • NCB can also be transferred across different insurance providers. You can also transfer your NCB to a new car.
  • NCB protector cannot be added in the middle of an insurance term, or on meeting with an accident with fresh damages

When is the NCB in Car Insurance Terminated?

  • The NCB in car insurance is terminated when the insurer claims for damages on the insured vehicle during the insured period.
  • The NCB in car insurance is also terminated if the car insurance has not been renewed within 90 days since the expiry of the car insurance.
  • Mid-term inclusion of NCB protector or addition is usually not allowed.
  • While using the protection plan, the vehicle must be repaired in a list of pre-approved garages across the country provided by the insurer.
  • Misrepresentation of facts regarding a claim and OD.

How to transfer NCB to new car insurance?

Doing an NCB transfer is not difficult, irrespective of whether your new insurance policy is being taken online, or offline through an agent. The process to transfer the NCB to new car insurance typically varies depending on the mode of purchasing the new insurance policy.

In case the new policy is being taken online, sharing your old policy number and the name of the previous insurance provider should easily help complete the NCB transfer process, and the new insurance company will have added your no-claim bonus to your new policy seamlessly.

If the new policy is being taken offline, you have to:

  1. Contact the old insurance provider
  2. Submit all the documents and request the old provider for an NCB transfer
  3. The previous insurance company reverts to you with an NCB certificate
  4. Share the No Claim Bonus certificate with the new insurance provider
  5. The new insurance company will transfer the insurance to the new insurer or insurer’s vehicle
  6. Note that the insurer should be the same in both the old and new policies, else the No Claim Bonus cannot be transferred.

What documents are required for NCB transfer?

The insurer or the insurance policyholder needs to submit the below documents to facilitate a transfer of the No Claim Bonus from the previous insurance provider to the new insurance provider:

  1. Previous and New car insurance photocopies
  2. Transfer application
  3. Forms 29 and Forms 30 – Buyer and Seller Agreement
  4. Previous registration transfer certificate copy in the case of the sale of the car
  5. Delivery Note copy (in the case of the sale of the car)
  6. Booking receipt copy (in the case of buying a new car)
  7. No Claim Bonus Certificate

What is No Claim Bonus Protection Cover?

The No Claim Bonus protection cover is an add-on that can be purchased while renewing the insurance. If you purchase this no-claim bonus protection you can protect your no-claim bonus built up so far even if you do end up claiming damages during the bonus protection cover period. The no-claim bonus protection cover cannot be bought amid an insurance term and must be purchased while renewing the insurance.

NCB and Third Party Insurance

NCB is not applicable for liabilities. It is simply a bonus for keeping your vehicle damage-free. Third-party insurance, on the other hand, involves getting a claim for “own damage” with a comprehensive insurance plan. Both are completely different.

More Important things about No Claim Bonus

  • You can save up to 50% on the annual premium of your motor insurance policy using the no-claim bonus every year.
  • No Claim Bonus is valid only if the insurance is renewed 90 days after the expiration of the previous policy
  • You can opt for a No Claim Bonus protection bonus if you think you may end up claiming during that period, and your No Claim Bonus will be protected and remain unaffected even if you do.

How many types of NCB are there?

There are mostly two types of No Claim Bonus offered in India. These include the Cumulative Benefit NCB and a discount on the premium. The discount on the premium is the most common form of NCB offered in the auto insurance sector.

Cumulative benefit NCB – the insured does not receive any discount, however, the sum insured is increased. The reward is in the form of an increased sum insured at the time of insurance policy renewal for not raising any damages claim. This is mostly available under health and rarely under auto.

Discount on premium – here the reward is offered in the form of a discount that increases with every successive year, on the premium that has to be paid. This is the most widespread form of NCB available for auto insurance.

Is no claim bonus taxable?

No. The no-claim bonus discount that applies to the next premium will reflect on the invoice being given to you. The final amount of the insurance premium after the deduction of the no-claim bonus discount will be considered for charging GST. No claim bonus or NCB is classified as a permissible discount under section 15 (3)(a) of the CGST Act in India.

Can I transfer my NCB to my wife?

NCB cannot be transferred to any other person other than the original insurance holder. It can only be transferred from one vehicle to the other, or from one insurance provider to another, with the insurance policyholder’s name being the same.

How do I claim NCB?

If you do not make any claims on the insurance policy during the insured period, then an NCB discount will automatically be offered to you by the insurance provider at the time of insurance renewal. In case you are planning to switch to a new insurance provider, then you can request a no-claim bonus certificate from the previous insurance company, which you will have to submit to the new insurance company along with certain documents to allow the NCB to continue.

Can NCB be transferred from a company to another person?

No. NCB cannot be transferred from one insurance policyholder to another. The No claim bonus can only be transferred across vehicles, from the old vehicle to the new vehicle provided the insurance holder is the same, and across insurance companies, from the previous insurance company to the new insurance provider, provided again that the insurance holder’s name remains the same.

Will I get a No Claim Bonus if I change insurance companies?

Yes, you can still get your no-claim bonus when you change your insurance policy by opting for a new one from another insurance provider. You just have to make sure you submit all the relevant documents to the new insurance provider. You can request an NCB transfer certificate from the previous insurance company, which you can share with your new auto insurance provider. Your new auto insurance provider will continue the NCB on your new plan and offer you a discount based on your NCB accumulation so far.

What happens to NCB after the claim?

After a claim is made, the NCB stands nullified. You will no longer receive a discount or a bonus on your next year’s insurance premium because you have already made a damage claim. The entire idea of a no-claim bonus is to reward you for not having made any insurance claim during the insurance period.

How can I check my NCB online?

Aggregators like PolicyBazaar offer insurers a dashboard on their website to check all the details of the insurance plan they have availed. After logging in to the website, auto insurers can check their applicable discount percentage based on the policy that they have taken under NCB.

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