No Claim Bonus(NCB)

2016-05-05 17:05:00 UTC

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What is NCB?

NCB stands for No Claim Bonus, it’s offered as a discount on premium for making no claims in the preceding year.

You’re eligible for NCB during renewal, if you haven’t made a claim against your existing policy. Every time you renew without having made a claim, your NCB discount increases, up to a maximum of 50% in 5 years.

The NCB discount is applicable only to the own damage component and not the Third Party(TP) liability component of the premium. The own damage component usually constitutes 75-80% of the total premium. For instance, if the premium is ₹20,000 and the own damage component is around ₹16,000 then a 50% NCB discount will reduce your premium to ₹12,000 and not ₹10,000.

NCB is not available on third party insurance for cars; if you have only third party car insurance no NCB is earned irrespective of whether any claims have been made or not.

Often, your NCB is used by the insurer to tell what kind of a driver you are. The NCB belongs to you, the driver, and not your vehicle, so it’s possible to transfer your NCB from one vehicle to another.

NCB transfer

Sometimes you have a policy on your vehicle with an applicable NCB, but then you buy a new car and of course, the policy you buy for the new vehicle doesn’t carry over your NCB, so it’s reset to zero!

So is there a way to transfer your NCB? The answer is yes- if you sell your existing car.

There are certain documents you will need to submit to the insurer of your new car:

1. Deed of sale from dealer

  • Original receipt of selling the car

2. Confirmation of receipt of car by dealer

  • Done by filling form 29, form 30.

3. NCB certificate from your previous insurer

  • You’ll have to submit form 29, 30(buyer seller agreement form), and a letter requesting transfer of your NCB to the new insurer.

While buying insurance online, however, you don’t have to get a transfer certificate, NCB is transferred based on your declaration. However, you should not see this as an opportunity to conceal claims made on the previous policy, as your new insurer could easily access and confirm such information with your previous insurer and recover the dues, should you be found guilty of false declaration.

NCB transfer must be done within 90 days of policy expiry, and the NCB certificate is valid for 3 years.

If you have sold a car, received your NCB transfer certificate, and have a new car you can transfer NCB to the new vehicle. If your new vehicle is already insured then you can use your certificate to get the bonus transferred to your policy upon renewal(this way you jump from NCB of 0 to NCB on your certificate directly).

When you sell your car, you transfer the insurance policy to the buyer but not the NCB. The insurer will ask the buyer to pay the difference in no-claim bonus due on the policy. This will be on a pro-rata basis until the expiry of the policy.For example if you sold your car in April and the insurance policy for the car expires in July, the insurer will recover no claim bonus for 3 months from the buyer.

You can usually transfer your no claim bonus (NCB) from one insurer to another so you need not stick with your current insurer at renewal to benefit. To do this, you are required to submit a renewal notice from your previous insurer clearly stating your NCB entitlement; contact your insurer and request confirmation of your NCB in writing.

An important caveat is that NCB for one class of vehicle cannot be transferred to another class. If you have a 50% NCB on your motorbike policy, then you can only transfer it to another bike, and not to a car. Similarly NCB earned on private vehicle can’t be transferred to a commercial vehicle.

NCB earned abroad can be utilized in India, provided the insurance is taken out in India within 3 years of expiry of the overseas insurance policy. A declaration letter is needed in this case as well.

In Case of Damage

If you have repairs to make that you want to claim, do a little check first. Sometimes, if the claim amount is small, you stand to gain more by paying for the repairs yourself, and preserving the NCB.

For instance, if your premium’s Own Damage(OD) component is ₹16,000, and you have a 50% NCB, then the discount you get on your renewal premium next year is ₹8,000. If the repairs you have to make cost less than ₹8,000, then you’re better off paying for those repairs yourself.

An NCB protector add-on can allow you to make claims without losing the NCB. The add-on costs in the range of ₹1,000-2,000, and allows you to make 1 claim in the duration of policy without losing your NCB. There is generally an upper limit set on how much you can claim without losing your NCB, so if you are opting for the add-on, do read the terms & conditions thoroughly.

The perilwise motor calculator computes your NCB savings, and recommends an ideal voluntary deductible for you to set to minimise the cost of your insurance

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