A No Claim Bonus is a reward given to the owner of the insured vehicle for effective and safe driving, without creating any accidents and therefore not claiming any insurance amount. Let us take a detailed look at this bonus and try to answer a few questions about it.
What is it ?
No Claim Bonus generally called as NCB is a benefit available to all policyholders insuring their vehicle which let them to have a reward for safe and effective driving. No Claim Bonus gives the policyholder a discount or bonus on the insurance premium if there are no claims made by the policy holder on the policy and is given for the next year at the time of policy renewal. It is applicable on the premium for own damage portion of the motor insurance policy and not for the Third Party Component.
How much bonus can one get ?
Every insurance company offer the same No Claim Bonus. In the case of cars and two wheelers it starts at a 20% discount at the second year during renewal of the insurance policy and can go up to a maximum of 50% in the sixth year.
Is there any exception in No Claim Bonus, if there is a Claim ?
NCB is offered as a reward to policyholders who do not have any claim in the previous years. So if there is a small claim it may take away the full bonus. Some insurance companies however offer the options of choosing a NCB retention add-on which offers a protection on NCB up to a certain limit allowing NCB claim even if there are claims made subject to certain predetermined limits of claim made.
Cancellation or Declining of No Claim Bonus
It can be mainly declined due to two reasons. The insurance company can deny a No Claim Bonus in case if the policyholder has made any claim during the policy period. Also in the case of a break of more than 90 days between insurance periods from the date of expiry of the old insurance to the new insurance policy is approved, the company can decline the NCB.
Transfer of No Claim Bonus
No Claim Bonus is offered to the policyholder and not to the vehicle which is insured. Therefore it can be transferred in the name of the current vehicle owner when purchasing insurance against any new vehicle in his name.
How to Transfer No Claim Bonus ?
A copy of the transfer of ownership certificate and the old registration certificate is required to transfer the No Claim Bonus. With this you can get a No Claim Bonus certificate from the insurance company.And then giving a written request with the new insurance company or for the new policy with the same insurance company to transfer the NCB in the existing policy to the new one.
It can be changed even if you are changing the Insurance Company. Also the NCB certificate is valid up to three years and can be transferred to a new policy.