As the name suggests, no claim bonus is the reward offered by the motor insurance company to the policyholder for not making a claim in the previous years. This reward is in the form of a premium discount on the renewal of the policy after the expiry of full policy period of 12 months.
This discount is only applicable on the own damage section premium and any discount is not provided on the third-party section premium.
This reward acts as an incentive for the policyholder to avoid rash driving and save the vehicle from any damage. It also encourages the insured, not to report claims of smaller amount under the policy. Let us understand it in this way, if the repair cost is considerably lesser than the renewal premium which can be saved by NCB, it is better to pay the repair expenses from own pocket and not disturb the NCB accumulated under the policy.
Point here to be noted is once a claim is made the accumulated NCB becomes zero and the insured needs to start afresh accumulating the same as per the grid shown below.
Nowadays insurers have come up with an add on named NCB protector which protects the NCB even if the policyholder make 1 or 2 claims under the expiring policy as per terms and conditions. Obviously, an extra premium need to be paid for opting this add on.
The India motor tariff provides with a standard schedule as per which no claim bonus will be applicable, this is common for all types of private cars, two wheelers and commercial vehicles.
There can be a slight variation in the NCB schedule for long term motor policies for some insurers. Any accumulated NCB can be terminated if the insurance policy is not renewed within 90 days of expiry of the previous policy. Considering this it is always better to renew the insurance policy to have a continuous protection and save some bucks on premium.
|For all classes of vehicles||Discount percentage on Own damage section premium|
|No claim made or pending for preceding year||20%|
|No claim made or pending for preceding 2 consecutive years||25%|
|No claim made or pending for preceding 3 consecutive years||35%|
|No claim made or pending for preceding 4 consecutive years||45%|
|No claim made or pending for preceding 5 consecutive years||50%|
In case of not making a single claim for last 5 consecutive years one can save half own damage premium while renewing the policy, which is a big deal!
The reward in the form of no claim bonus is given to the policyholder for his better driving skills and ability to avoid accidents and avoiding other claims safeguarding his vehicle and maintaining it in best condition. Thus, in case you sell your vehicle and transfer the vehicle in someone other’s name, your accumulated No claim bonus will not in any case be transferred to the other person, but the transferee will be getting no claim bonus, if any, accumulated in his name and under his previous insurance policy.
While transferring the vehicle one should ensure the ownership transfer to the buyer’s name by applying to the respective RTO and keep a copy of the new entry in the registration certificate. After successful transfer of the vehicle to its new buyer and when received the delivery note, the insurer should be sent a copy on basis of which the insurer will be sending the NCB certificate or a holding letter which is valid for a period of three years.
Applying the same concept, in case you substitute your vehicle with another one, say purchase a new vehicle after selling the old one, but of the same class (private car is substituted by a private car may be of another make, model or price and not a taxi which is a commercial class of vehicle) the NCB is eligible to be transferred. The NCB letter obtained from the previous insurer should be shown to the new insurer to get a discount as per eligibility on the own damage premium.
Also, if you switch from one motor insurer to another the new insurer will honour the earlier accumulated NCB and give a discount on the premium subject provision of NCB reservation letter from the earlier insurance company. We should not think of switching insurers in between the policy period because in this case we need to give up the NCB for that year.
NCB accumulated on the car provided to you by employer can be transferred provided you are named in the insurance policy provided by the employer.
In case of online purchase of motor policy, which is what most of the people now a days do, the need to the NCB letter is not there and a self-declaration is taken while purchasing the policy online. Through the self-declaration the insured declares that he has made no claim in the expiring policy years for which he is applying for the NCB under the current policy.
It should be noted that anyone should not lie while filling the self-declaration as the insurer will be verifying the same from their end for sure and there is a good chance of the lie being caught at the first instance. It is a good habit to take the proof of no claims from previous insurer at the end of each policy period.