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When it comes to car insurance, one of the most rewarding benefits for careful and responsible drivers is the No Claim Bonus (NCB). It’s a discount offered by insurance companies to policyholders who do not make any claims during the policy period. Essentially, NCB is a reward for driving safely and maintaining your vehicle well. Over time, this benefit can lead to significant savings on your car insurance premiums.
Let’s understand what No Claim Bonus is, how it works, and why it’s such an essential feature in your car insurance policy.
What is No Claim Bonus (NCB)?
The No Claim Bonus is a reward given to a policyholder for every claim-free year. When you don’t raise a claim during your car insurance policy period, your insurer offers a discount on the own-damage premium during renewal. This discount increases with each consecutive claim-free year, encouraging safe and responsible driving.
Typically, NCB starts at 20% for the first claim-free year and can go up to 50% after five consecutive claim-free years.
For example:
- After 1 year: 20% discount
- After 2 years: 25% discount
- After 3 years: 35% discount
- After 4 years: 45% discount
- After 5 years: 50% discount
This can result in a substantial reduction in your premium over time.
Key Benefits of No Claim Bonus
1. Significant Cost Savings
The most obvious advantage of NCB is the discount on your premium. With each year you avoid filing a claim, your discount grows. By the fifth claim-free year, you can enjoy up to 50% off on the own-damage portion of your premium.
For instance, if your own-damage premium is ₹10,000, a 50% NCB would reduce it to ₹5,000—saving you ₹5,000 every year. That’s a huge reward for being a cautious driver.
2. Encourages Responsible Driving
Knowing that a claim could reset your NCB encourages drivers to be more cautious and responsible on the road. Policyholders are more likely to maintain their vehicles, follow traffic rules, and drive safely to retain their bonus. This makes NCB not just a financial incentive but also a motivator for safer driving habits.
3. Transferable Benefit
Another major perk is that the NCB belongs to the policyholder, not the vehicle. This means if you sell your old car and buy a new one, you can transfer your accumulated NCB to your new car’s insurance policy.
So even when you upgrade your vehicle, your years of careful driving continue to reward you.
4. Portable Across Insurers
Even if you switch to a new insurance company, your NCB doesn’t vanish. Insurance providers allow you to carry forward your NCB when you move to another insurer. You simply need to present proof of your previous NCB (such as an NCB certificate or renewal notice), and your new insurer will honour it.
5. Helps You Avoid Small Claims
Sometimes, minor damages or scratches may tempt you to raise a claim. However, if the repair cost is small compared to the NCB discount you might lose, it’s better to pay out-of-pocket and retain your bonus. This approach helps you save more money in the long run.
How to Protect Your NCB
To make the most of this benefit, consider adding an NCB Protector Add-on Cover. This optional add-on allows you to retain your accumulated NCB even if you make one or two minor claims during the policy term. It’s a smart choice for those who want peace of mind while still enjoying their NCB benefits.
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Conclusion
The No Claim Bonus is more than just a discount — it’s a reward for being a responsible and careful driver. Over the years, it can lead to significant savings, encourage safer driving habits, and offer flexibility when switching vehicles or insurers. To maximize your NCB, avoid small claims and consider adding an NCB protection cover.
In short, safe driving not only keeps you and others secure but also saves you money — and that’s what the No Claim Bonus is all about.