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If you have been planning to get car insurance, you should know more about No Claim Bonus. Alongside understanding the insurance policy coverage, premiums, and your car’s depreciation rate, you should also have a good understanding of the No Claim Bonus.

What is No Claim Bonus?

A No Claim Bonus (NCB) is an indicator of how well you keep your car. I love to keep my car in the best of its condition, and I love to drive it safely. Thanks to this, none of my cars have ever been involved in major or even minor accidents. So, this would generally attract an NCB and decrease the insurance amount for me significantly on every subsequent policy. However, recently I was all set to purchase a new car and wanted to sell the old car to the same dealer. But, I was not sure what would happen to my no claim bonus.

Information about no claim bonus transfer:

I went to my new car insurer (which the dealer had a tie-up with) and checked with them about no claim bonus transfer

Their agent told me that a no claim bonus belongs to a combination of a car and its named owner. So, when you sell your car to someone else, that person cannot take advantage of your no claim bonus. So, if you are buying an old car, know that the old car’s NCB will not apply to you.

My next question to the agent was – whether I can utilize the no claim bonus of my previous car, for my new car

The agent explained to me that this was quite possible and that they did have a conditional provision for this. He told me that he needs to go through my old insurance papers to check the details. I promptly shared my old insurance copy with him. In some time, with a smile on his face; he told me that I was eligible to transfer my no claim bonus benefits to my new car.

I immediately asked him, how much can I save as part of this ncb transfer

He politely told me that I had reached the maximum no claim bonus of 50% in my old car. I came to know that I will be getting a good discount because of this. The NCB amount, generally, starts from 20% and increases 5% each year to reach a maximum of 50%. So, the maximum that you can save is 50% of the car insurance amount.

Next, I wanted to know about the documents needed for the bonus transfer

I found out that we mainly need three documents. The first document is the sale deed of the car along with a delivery note. The second document is the new car’s booking form. And, the third document is the old car’s insurance copy or its NCB certificate. Some insurance companies may require these documents in the format of Form 29 and Form 30.

Finally, I wanted to know about the timeline in which the no claim bonus transfer process will complete

The agent smiled again and said that it will just take a couple of days. He assured me that the entire process will not take much time. So, once you submit complete documents, your new insurance will be in your hands with a good discount.

The NCB really helped me bring down the cost of my insurance significantly. No claim bonus can do wonders for your pocket. NCB starts from 20% and can reach up to 50% of your car’s insurance amount. You not only get its benefits in your current car policy but can also reap its benefits in your second car’s policy. Just remember to ask your motor insurance agent about the ncb transfer when purchasing a new car.

Benefits of No Claim Bonus

In the simplest terms – when you do not claim insurance coverage for a year, your car insurer rewards you with a reduced premium for the following year. There are several benefits to having No Claim Bonus:

  1. It brings down the cost of owning the insurance policy without compromising the coverage or the benefits. 
  2. It incentivizes safe driving. Since you have a very clear motive of getting the No Claim Bonus at the end of the year, you would want to drive safely throughout the year.
  3. Within the parameters of most insurance companies, No Claim Bonus is transferable for the same person. Hence, you get the benefits of the No Claim Bonus, even if you change your car. While you cannot transfer the No Claim Bonus to your car’s new owner, you can still keep it for your new car. 
  4. You can use the No Claim Bonus certificate to show that the car you own has incurred no damage. This can help in getting a more accurate price of the car in the resale process. 

You don’t need a No Claim Bonus calculator to get the benefits of this insurance feature. This table will help you understand the reduced premiums per year if you do not claim the insurance year on year. As you will see, the biggest benefit unlocks right after the first year, and then it keeps getting reduced until it reaches the cap of 50%. 

Year (No-Claims Made) Reduced Premium (Percentage)
1 20%
2 25%
3 35%
4 45%
5 50%

How to Transfer NCB to New Car Insurance?

One of the key benefits of having NCB in place is that safe driving behaviour gets rewarded, even after changing your car. This means you can avail the No Claim Bonus, irrespective of whether you own the same vehicle or not. Here is what you will need to get the process done:

  1. Collect your Form 29 and Form 30.
  2. Collect your No Claim Bonus Certificate, issued by the insurance company you have dealt with.
  3. Request your insurer to process the NCB and update the vehicle information. 

If you are changing your insurer, you might have to go through one or two additional onboarding steps. Other than that, transferring your NCB is a simple process.

How Does No-Claim Bonus Work?

While NCB is beneficial to every car owner, here are some working processes you should be aware of:

Comprehensive vs. Third-Party:

If you have only the basic third-party insurance (also used in two-wheeler) availed, you might not use the No Claim Bonus. The feature has been designed to nudge safe driving behavior among policy owners that protect their vehicles and the damages they incur. 

Minor Damage Claim:

No-Claim Bonus works on a simple principle – if you don’t make any claims, you will get the bonus. This also means that if you make even a small claim, you will materially lose the bonus. Some insurers allow for an NCB-protection add-on that protects your No-Claim Bonus if the claims you made were minuscule. 

In Conclusion 

There are clear benefits to having car insurance in place. It protects you from third-party claims, damage to your vehicle, tax deductions (wherever applicable), and keeps you updated on your car’s value. No-Claim Bonus amplifies the benefits you get from your insurance by bringing down the premiums that are the primary cost of owning a policy. Hence, when you get your new car insurance policy, make sure you understand the terms & conditions of the NCB in detail.

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