Insurance Product

All that you must know about NCB in Motor Insurance

A comprehensive motor insurance is an excellent tool to ensure the safety of our vehicle and it also provides us coverage against third party liability which may arise due to our vehicle. No claim bonus (NCB) is an important element in motor insurance that can help reduce your motor insurance premium at the time of renewal. Your insurer grants NCB to you for each claim-free year. The NCB discount is granted as per slabs; it starts from 20% for the first claim-free year and gradually goes to 25%, 35%, 45%, and 50% for second, third, fourth, and fifth consecutive claim-free years, respectively. The discount is capped at 50%.

Let’s understand more about NCB and its important features.

Applicable only to Own Damage (OD) premium

NCB is applied only on OD premium and not on the third-party premium. To give you an example, suppose the entire premium is INR 3,000 and say 20% of this is TP premium which is INR 600. The NCB discount will apply to the OD premium of INR 2,400.

NCB is granted to the driver

NCB is a reward for your good driving behavior. This means you can easily transfer your NCB when you change your vehicle or move to a new insurer. Also, you can keep your NCB intact for a longer period by avoiding raising a claim for some minor damage. It is smart to do a cost vs benefit analysis before filing a claim. To give an example, suppose you are eligible for an NCB discount of INR 6,000 next year, and you encounter minor damage, and the repair cost is INR 3,000. If you raise the claim for this repair, costing INR 3,000, you will lose your right to claim the NCB bonus of INR 6,000 and make a loss of INR 3,000. A quick analysis will help you figure out if you should file the claim or not

NCB transfer procedure

NCB transfer is quite a simple process. For the offline procedure, you can reach out to your insurer, request them for NCB transfer, and submit required documents, the insurer will release your NCB certificate. You have to submit the certificate to the new insurer and they will transfer the NCB.

If you are purchasing the cover online, in that case you just have to inform the new insurer about the correct NCB, previous policy number, and name of the previous insurer. The new insurer will transfer the NCB.

Another interesting point is that the NCB certificate is valid for 3 years. So if you are going overseas for a couple of years or plan to go off-road for some time, you can be rest assured about the validity of the NCB for said number of years.

How to transfer NCB to a new car ?

The important thing to note while transferring NCB to a new car is that you cannot avail the discount till the time you are the owner of the older car. You can sell your old car, retain the NCB and transfer it to your new car. An alternative scenario is that you might not want to part away with your old car, in that case, you can transfer the ownership of the older vehicle to your family member.

Here is how NCB helps bring down the premium of your new car. Suppose your older car is 8-10 years old, and you haven’t made any claim in 5 consecutive years, which means you are eligible for 50% NCB. You have just bought a new car, and the premium amount is INR 30,000; out of this INR 5,000 is third-party premium and the remaining INR 25,000 is the premium for the own damage. You can transfer the 50% NCB that you have rightfully earned, and get a discount on INR 25,000

NCB termination

NCB will terminate under following two scenarios:-

  • When you file a claim
  • If you do not renew your motor insurance policy within 90 days from the date of expiry

NCB protection add on

Now that you know the importance of NCB in reducing the premium, I suggest you consider buying an NCB protection add on which will help you in keeping your NCB active even if you file a claim. The number of claims that you can file, and still keep the NCB intact, varies from insurer to insurer but mostly up till two claims are allowed in the policy year.

I am sure that the aforementioned details would have given you a clear idea about the importance of NCB, how you can utilize it to your benefit, and how you can retain it for a longer period. For more details, you can reach out to your insurance agent or insurance company, they will be happy to guide you. Drive safe, enjoy your ride, and use your NCB wisely.

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