No Claim Bonus or NCB, as it is popularly known, is an additional benefit that you get at the end of the year if you have had a no-claim year with your car insurance policy. It is basically a reward given by the insurance company for your exceptionally responsible driving skills that led to you not being involved in any accident and making zero claims. This reward comes in the form of lower premiums during the following policy year.
Now, the big question is - will you have to part ways with this hard-earned bonus just because you wish to sell your car in the middle of the term? Before finding the answer, let us first help you understand the basics of No Claim Bonus and how it works.
Why and When does the Insurer Provide You NCB?
The major reason for the car insurance company to provide NCB to their customers is to reward them for their safe driving in the preceding year. However, another reason why the insurance company is ready to provide a discount is that such customers have a low-risk status. This discount can go up to 50% if you manage to make no claims for 5 consecutive years!
How does the NCB Work?
| Claim free year | Bonus % |
|---|---|
| 1 Year | 20% |
| 2 Years | 25% |
| 3 Years | 35% |
| 4 Years | 45% |
| 5 Years | 50% |
| 5+ Years | Varies from company to company |
More often than not, your NCB will be checked when you file for a policy renewal. One thing to keep in mind is the fact that it belongs to you and not your car. As it is attached to the car owner, you have the right to a bonus even when you do not have the same vehicle. In other words, you can transfer the NCB if you end up buying a new car.
However, note that if you have two different cars then you will have to get two separate NCB certificates. Yes, you can transfer the NCB from one of your cars to the other one.
How Can You Retain Your NCB Even If You Sell the Car?
You can transfer your NCB to the insurance policy for the new car. This process will not be done automatically - you will have to file for the transfer of the NCB and wait for the insurance provider to do the needful. Fortunately, you can complete the whole process online in a few minutes.
But, what happens if you sell your car and don’t buy a new one? Well, you can preserve the NCB for a couple of years by getting in touch with the insurance company. However, note that you cannot preserve the NCB of a hatchback and then use it for a sedan. Instead, you will have to stick to the same class of cars while making the switch.
As mentioned before, the NCB belongs to you, so you cannot transfer it to another person. However, some service providers do offer the option of transferring the NCB to the spouse of the insured.
Can You Retain NCB Even After Making a Claim?
Now, this is an interesting question that many insured people have, and yes, you can retain the NCB even after making a claim. It does sound contradictory to the whole idea of a No Claim Bonus but you can do it by adding an NCB Protector Cover to the policy. This enables you to make a certain number of claims in a year and still enjoy the benefits of the NCB!
Let's understand this with the help of an example-Rahul Verma and Ayush Sharma bought expensive vehicles of the same make and model and chose a comprehensive car insurance policy. Rahul has also opted for NCB Protection Cover at the time of purchasing his policy, whereas Ayush did not do the same.
In the 4th Year, Rahul has raised a claim, so his total NCB accumulated till now, i.e. 45% would still remain intact and will not come to zero. Thus, he can further get a discount on his next premium.
However, Ayush also raised a claim in the 4th year of his policy tenure. Thus, his total NCB accumulated, i.e. 45% will now come to zero hence he cannot get discounts on his next policy premium. This is because he has not opted for the NCB Cover.
Calculation | Rahul (With NCB Cover) | Ayush (Without NCB Cover) |
|---|---|---|
| Claim Raised After 4 Years | 45% (accumulated NCB) | 45% (accumulated NCB)
|
| NCB Status (Balance) | 45% | 0 |
The other option you have to retain the NCB even after making a claim is to buy a multi-year car insurance policy. You can enjoy the benefits and discounts of the policy until the end of the term, irrespective of whether you have made a claim or not. Such a policy is ideal for users who tend to forget the renewal date.
A Note on the NCB Certificate
One thing to keep in mind about the NCB certificate is that you need to transfer it to your name before selling the insurance policy to the new owner of your car. It is very important to do this because once the RC and insurance policy is transferred to the new owner, the NCB too gets transferred.
The NCB ensures lower premiums when you renew your policy, and this can help you save money and invest the same in a different avenue. Thus, you must follow the right steps to retain the NCB even after you sell your car.
To know more about ensuring, you can avail your NCB with NCB Protection Cover, check out these scenarios in which you should not file a claim!
