Every car owner must insure their vehicle. It is an essential requirement that you must have. You have the choice to select between the myriad options and even the type of coverage – third-party or an all-inclusive comprehensive plan. Moreover, the Motor Vehicles Act of 1988 makes it mandatory to have insurance for all vehicles registered in the country.
For every car insurance policy, the policyholder pays a fee in return known as the premium of the policy. This amount differs according to the type of policy, IDV, its coverage and various add-ons opted. It is not always that you make an insurance claim. In some periods, there is no claim for any repairs or damages. At such time, the insurance companies offer a kickback to the policyholder in the form of No-claim Bonus. This no-claim bonus or NCB is the concession provided at the time of renewal premium that starts from 20% and goes all the way up to 50% for consecutive claim-free policy years.
Most policyholders are aware of NCB but often misinterpret the nitty-gritty of the benefit. Let us look at five things that you should know about NCB.
#1 The percentage of NCB
The percentage of NCB is in the range of 20% to 50%. Here is how NCB is awarded for each consecutive claim-free years:
|Number of claim-free years||Percentage of NCB|
|1 year without claim||20%|
|2 consecutive years without any claim||25%|
|3 consecutive years without any claim||35%|
|4 consecutive years without any claim||45%|
|5 consecutive years or more without any claim||50%|
#2 It is advisable to forgo small claims
When making an insurance claim, you must consider the amount of claim that will be issued by the insurer. This amount should be compared with the amount of NCB benefits that will be paid if the claim is forgone. Say, for example, the claim amount is ₹5000, and after a deductible of ₹2000, the insurance company pays ₹3000 as final settlement. In this example, if the amount of NCB at your car insurance renewal is more than ₹4000, it is advisable you skip claiming for such minor expenses.
#3 You can switch your policy and still avail NCB benefits
The portability feature of car insurance policies by the regulator offers any accrued benefits to be transferred to the new insurance company. This way, you do not lose out any benefits that might have been earned with your previous insurance company.
#4 NCB belongs to the policyholder and not the car
A policyholder is rewarded with NCB benefits and not the vehicle. Thus, if you purchase a new car and you haven’t made any claim during the previous year, this benefit can be carried forward to your new vehicle too.
#5 NCB benefits are available only for comprehensive plans
The no-claim bonus is available only for own damage cover of the comprehensive policies. Since third-party plans only offer liability coverage, no benefits are available for them.
These are some of the nifty tips that make you a smart buyer of car insurance plans. Also, a car insurance calculator is a handy tool that can help you in comparing as well as availing affordable deals on car insurance policies.