How NCB Works for Car Insurance?
How NCB Works for Car Insurance? 12th September 2019
Your car insurance comes with an annual premium, which helps you bear the financial losses that may arise due to an accident. While a claim-free year may seem like a waste of money since you paid the premiums but didn't really use the benefits, it's really not the case. Firstly, having insurance provides you with mental peace that in the case of any mishap, your finances will be covered. Secondly, your insurance provider offers you discounts on your next year's premium if don't make a claim in the previous year. This is what is known as a No-Claim Bonus (or NCB). Keep reading to find out more on how to maximize savings on your private car insurance in India.
What should you know about NCB?
Car insurancecompanies reward vehicle owners who drive safely with no-claim bonuses. The bonus becomes applicable if you get through one policy year without making a claim. The company pays the discount on Own Damage (OD) premium for each claim-free year
Typically, the amount can vary from one insurer to another. But, discounts begin at 20% per year and can go up to 50% for five claim-free years or more.
How does NCB work?
When a policyholder does not file any claim in the past one year, a no-claim bonus is initiated by the insurer.
As a result of this, you’ll get a discount on your annual premium amount subject to increase with every succeeding year.
Things to remember about NCB in India
An essential feature of NCB is that it relates to the policyholder, not the vehicle as it rewards you for precautions taken on your end. So, you can retain your NCB even if you replace your existing vehicle. Other prominent features of a no-claim bonus are:
• Applies even when you switch the insurer
When you switch from one insurer to another, the no-claim bonus remains unaffected. For example, if you have a policy from company X for the last five years with no claims made and you shift to company Y later on, the company Y will give you a benefit of 50% discount on your annual premium as NCB.
• Bonus increases every year
The insurance companies calculate your no-claim bonus in the range of 20%-50% on an annual incremental basis.
• Doesn’t apply on third-party cover
Keep in mind that the no-claim bonus applies to the own damage or OD cover on your auto insurance. So, if you have only the third-party (TP) cover, you’re not eligible for NCB. However, if you have both OD and TP protection, you’ll receive the discount proportionately.
Protecting your NCB
As NCB policyholders, you are entitled to a maximum discount of 50% for five claim-free years. However, this discount expires if you make even a single claim. In such a case, to protect your NCB, insurers give you the option of opting for an add-on cover. It covers your claim in order to protect your NCB.
Another great hack to keep your NCB would be to avoid making claims for smaller damages.
Head over to Magma HDI to find out more about NCB available with your private car insurance in India.