Cars are no longer any luxury but a necessity in modern age. With easy finance available to purchase cars, it has become simple to get your hands on one. But all isn’t done once you purchase a car. You also need to invest in car insurance policy. Depending on your requirements, a choice can be made among a third-party policy or a comprehensive policy.

A third-party plan, as the name suggests, ensure safeguard from third-party liabilities. These arise in the event on accident or damage injuring third person or causing property damage. Although a third-party car insurance policy is the minimum requirement as per the Motor Vehicles Act, it doesn’t extend to cover the damages to your car. Thus, a comprehensive policy helps to cover the damages to your car too since it isn’t only the third person’s car that get damaged in an accident. Moreover, a comprehensive plan has added benefits like cashless claim facility, customising coverage and also the no-claim bonus.

But what is a no-claim bonus(NCB)? A no-claim bonus is the benefit passed on by your insurance company for not making any claims during a policy tenure. It is not each year that a claim shall be made, but sometimes a year goes by without any claims. However, you must note that this concession is limited to the own-damage component of the comprehensive plan. Generally, policyholders are unaware of the such benefit that helps them lower their insurance premium. This article elaborates on five facts about no-claim bonus that every car insurance buyer must know.

#1 Percentage of NCB

Car insurance companies offer the no-claim bonus for a period when no-claims have been made and is offered as a percentage of own-damage premium. This no-claim benefit is a significant component that lowers the burden of premiums. It starts at 20% and goes all the way to 50% for every claim-free policy tenure. * Standard T&C Apply

The table below describes how it increases for each claim free period:

Please refer to the official website of IRDAI for further details.

#2 It is prudent to forego claims for minor repairs

When you make an insurance claim, you, as a policyholder, are required to pay the deductible portion of your policy. Only after that, the insurance coverage kicks in. But apart from the deductible that you need to pay, you also lose out on the opportunity to avail the NCB benefits. Since the no-claim bonus is offered only after a policy tenure without any insurance claim, you forego that benefit too.

#3 NCB is available on transfer of your insurance

Unlike other policy benefits, the NCB benefits are available even when you change your insurer. At car insurance transfer, all you have to do is obtain an NCB certificate from your existing insurer and provide it to the new insurance company. This way, you can avail the new policy at a lower premium. Please refer to the official website of IRDAI for further details.

#4 NCB is linked to the policyholder and not the car

The NCB is linked to you and not your car. Often interpreted the other way, the reality is different. Hence, you need not worry even if you upgrade your ride, you can always avail the NCB benefits in your new car insurance policy.

These are some of the tips you need to know about the NCB. Remember the NCB benefit is available at car insurance renewal online or offline and not at the fresh policy purchase other than transfer. Also note insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.