No Claim Bonus in Car Insurance: What you Should Know?
Everybody has a vehicle these days, two-wheeler or four-wheeler. In fact, the number of people who own a four-wheeler is now increasing at quite a healthy rate. In India, it is mandatory to have insurance for your motor vehicles, a third-party liability-only policy at the very least. However, due to the limitations in the third-party car insurance policy, people prefer going for comprehensive car insurance plans owing to the wide coverage these plans provide.
Insurance Absorbs Financial Burden
In the current scenario, driving comes with certain inherent risks. One of them is an accident. If your car gets damaged in an accident, then the repair charges for the vehicle can be expensive. This is where a car insurance plan comes handy, as it bears the financial burden arising out of an accident. You can compare various car insurance policies online to select the one that suits your requirements.In every car insurance policy, there is a premium amount involved. This is the amount that an insured pay annually to the insurer during the policy years. There are several aspects that go into the process of computing the premium amount. One of these is No Claim Bonus (NCB).
What Exactly is a No Claim Bonus?
This is a kind of incentive offered by the car insurers to encourage people to drive safely on roads, keep their vehicles accident-free, and avoid making claims. This incentive takes the form of a bonus, which is then offered to drivers for not making any claims during the policy years. This is called the No Claim Bonus. It is given to drivers at the time of motor insurance renewal. During renewal, this NCB amount is shaved off from the premium payable, and the driver is required to pay only the balance amount.
Crucial Things to Know About the NCB
1. NCB Amount
The NCBs offered by the insurance companies start from 20 percent and then go on to 50 percent on a yearly basis. If you don’t make any claim during the first year, you will get an NCB of 20 percent. This touches 50 percent at the end of 5 years if there are no claims from your side.
2. Avoid Small Claims
As said earlier, the moment you make a claim, the NCB goes off from your policy. So, it is advisable to analyze and compare the claim amount and the NCB amount before opting to make a claim.
3. It is Solely Yours
NCB is applicable for owners and not for cars. That is, if you buy a new car after selling a four-year-old one, you can still avail of the benefit of the NCB. The bonus can be claimed even after purchasing the new car if you haven’t made any claim in those four years.
Applicable Even If you Change Insurer
In case you switch from your present insurance company to IFFCO Tokio, you are still entitled to No Claim Bonus. For the purpose of understanding, if you have not made any claim for the initial 4 years, and in the fifth year you choose a new insurance company, then the new insurer will give you NCB as per the guidelines.
4. Not Included in Third-Party Insurance
You can claim NCB only if you have a car insurance policy that covers personal damages. If you have a third-party liability-only policy, there won’t be any NCB.
How to Protect your NCB?
As discussed earlier, you lose the NCB the moment you make a single claim. However, there is an exception. You can enjoy the NCB even after making a claim. How is it possible? Car insurance companies provide add-on cover through which it is easy to protect your NCB post claims. This allows you to preserve your discount of previous years even after claims.
Now that you have a thorough understanding of No Claim Bonus, make the most of it with your motor insurance policy.
**To understand exactly about the policy coverage, exclusions etc read the Policy Wordings carefully.**