How does a no claims bonus work in a Motor Insurance Policy?
No claim bonus is generally earned by the insured on the own damage section of the policy. In the event if the insured does not claim during the year, then at the time of renewal he will get a discount on the premium. A discount in the own damage premium is granted between the range of 20% after one claim free year of insurance and max up to 50%.
No claim bonus is applicable as per the following scale:
|
All type of vehicles |
Discount per cent |
|
No claim made or pending during preceding full year of insurance |
20% |
|
No claim made or pending during preceding 2 consecutive years |
25% |
|
No claim made or pending during preceding 3 consecutive years |
35% |
|
No claim made or pending during preceding 4 consecutive years |
45% |
|
No claim made or pending during preceding 5 consecutive years |
50% |
How does ncb work:
Illustration: On the first renewal, a car with idv (sum insured) of rs. 5 lacs paying a premium of Rs 15,000/-, if there is no claim in the preceding year, the insured shall entitled for a discount of 20%. The policyholder will end up paying a premium of Rs 12,000/- and he shall clearly save around Rs 3,000 by not making a claim. The amount saved on the own damage premium generally, increases every year.
Please note:
- NCB becomes nil in the event of a claim
- The entitlement of the ncb is applicable to the original customer and not the vehicle or the policy. In the event of the transfer of theinterest in the policy from one insured to the another, the entitlement of the ncb for the new insured will be as per the transferee's eligibility following the transfer of interest.
- The percentage of the applicable NCB is computed on the own damage premium required for renewal of the insurance.
Transfer of NCB:
Ncb can be transferred from one vehicle to the another but the policyholder needs to be the same.
In case an insured holds ncb but fails to renew his policy on time, the ncb will be transferred to his policy if the policy is renewed within 3 months from the date of the expiry of the policy.
In case a client holds NCB & obtains a certificate from an insurance company for the same, he can take a fresh policy for a vehicle anytime within the next 3 years & be eligible to transfer it.
Termination of the NCB:
- In the event of a claim during the policy year, the NCB will be terminated.
- In the event, the policy is not renewed within 90 days from the date of expiry on the existing policy.
