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Tata Capital > Blog > Insurance > What is No Claim Bonus (NCB) and Its Benefits in Motor Insurance

Insurance

What is No Claim Bonus (NCB) and Its Benefits in Motor Insurance

What is No Claim Bonus (NCB) and Its Benefits in Motor Insurance

When you hit the road, you need two essentials: a driving license and car insurance. Car insurance policies protect you against financial risks, and in case you suffer a loss, the insurance company compensates you.

But what if you don’t suffer any loss?

Under general insurance, if you do not make any claim for a year, the insurance companies give you NCB as a reward. NCB’s full form in insurance is a No Claim Bonus.

If you want to understand the No Claim Bonus meaning and how important it is for you, keep reading.

What is NCB?

NCB’s full form in insurance is ‘No Claim Bonus’, a benefit that policyholders are eligible for every year that they don’t file a claim. Essentially, it’s a reward that car insurance providers offer for being a responsible driver and not needing to claim during the policy year. When you renew your insurance the following year, you can enjoy a discount on your premium.

However, it’s important to note that making even a single claim during the policy term could lead to the loss of your NCB. So, how does it work? Well, in the first year that you go claim-free, you can earn a reward of 20% on your comprehensive car insurance premium. And with each subsequent claim-free year, the reward percentage can increase by 5-10%.

Let’s say you’ve purchased a car insurance plan and paid a premium of INR 20,000. If you make no claims during the first policy year, you’ll earn a No Claims Bonus of 20%. So, if your renewal premium is INR 19,000, you only need to pay INR 15,200 after the NCB is applied.

If you continue to make no claims the following year, your NCB will increase to 25%. So, if your renewal premium for the third year is INR 17,000, you only need to pay INR 12,750. This bonus percentage will continue to increase yearly as long as you don’t make any claims. The insurance providers offer a maximum NCB discount of 50%.

Why is NCB important?

These are the points why a No Claim Bonus is important-

#1 Bigger savings

Did you know you can save more on your car insurance premiums by being a responsible driver? It’s true! By following the rules of the road and avoiding accidents, you can gradually increase your No Claims Bonus (NCB) percentage.

Moreover, if you go five years without filing a claim, you could be eligible for even bigger discounts on your premiums at every renewal. So not only will you be a safer driver, but you’ll also be saving money in the long run.

#2 NCB stay with policyholders, not cars

Your No Claims Bonus in insurance is a reward for your responsible driving, and it applies to you, not your vehicle.

So, let’s say you sell your car after three years and buy a new one. If you haven’t made any claims during that period, you can transfer your NCB to your new car insurance policy. This means you can continue enjoying the benefits of good driving even with a new vehicle.

However, it’s important to remember that NCB cannot be transferred from one person to another unless the car owner passes away and their heir inherits the car.

#3 Discounted premiums

One of the biggest benefits of NCB in insurance is that you can earn a discount of around 20% to 50% on your premium.

Here’s how it works: every year that you don’t make a claim on your insurance policy, you earn a certain percentage of discount on your premium. This means that over time, your NCB can add up and help reduce the amount you must pay when it’s time to renew your policy.

#4 Easily transferrable

Are you getting a better policy but fearing that you will lose NCB? Don’t worry; NCB can be transferred if you switch insurance companies.

So, if you find a better deal or a policy that better suits your needs, you don’t have to worry about losing your NCB. Instead, you can transfer it to your new insurer and continue enjoying the discounts you’ve earned.

#5 Better coverage

By having an NCB, you demonstrate a history of responsible driving. Therefore the more NCBs you have, the more the insurers will consider you as an experienced and good driver. This may motivate them to offer you additional benefits or coverage options.

To sum up

Now that you understand the No Claim Bonus meaning and its importance, it’s crucial to ensure that you make the most of it. One way to do this is to opt for an insurance plan that offers NCB benefits.

If you’re having trouble finding an insurance plan with NCB, turn to Tata Capital. Our car insurance plans include the amazing benefits of NCB, providing all-around protection for your vehicle.

Don’t wait any longer. Apply now and take advantage of this valuable reward.

Apply Now
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