NCB in Car Insurance

In India, the number of four-wheelers is increasing at a rapid rate. But before you buy a car in India, you must know that motor vehicle insurance is compulsory in India and you have to avail it while buying a car. But the good news is, that most insurance providers provide policyholders with NCB benefits.

Now, most people in India are unaware of what NCB even means in the first place! That's why, we're here to answer a commonly asked question, 

NCB Full Form in Insurance

NCB actually stands for ‘No Claim Bonus’. It is actually a kind of reward that the car insurance providers provide to their customers when they do not file any claim in a policy year. In this reward, the insured person gets a discount on their premium when they renew their insurance in the next policy year.

NCB in Car Insurance - How it Works?

While everything else around you rises in price, your car insurance gives you a special benefit by actually giving you the choice to reduce your car insurance premium. How does it work, you ask?

Well, it works almost like a rewards system. You start by gaining a 20% NCB discount if you haven’t made any claims for your first policy year. Consequently, you keep gaining an additional 5% from your second consecutive year of making no claims. This can go about a reduction of 50% in your sixth consecutive year. Long story short, the better driver you are, the better you protect your car- the better it works out for you in the long run.

Is it a Good Idea to Make Small Claims and Lose No Claim Bonus?

NO! In case you’ve got into a minor accident or are planning to use your car insurance for a small tyre burst, you could instead skip the claim and pay for its repairs yourself (only if you think it’s feasible!) and you can go a year without any claims and therefore gain a No Claims Bonus during your car insurance renewal. 

After understanding what an NCB policy is in insurance terms, the next big question is – how much is the no claim bonus for car insurance?

Calculating your car's No Claim Bonus is not that difficult. In fact, many insurance companies give you access to a No Claim Bonus Calculator on their websites that will help you calculate your No Claim Bonus amount accordingly. The same usually starts from the second year of your respective policy.

According to the present norm, NCB in India starts with 20 percent and goes up to 50 percent in the sixth year. No Claim Bonus percentage for any four-wheeler is generally calculated in the following way.

1. Gives you positive rewards: The NCB is nothing, but a means to reward you for being a good and responsible driver and car owner.

2. Connected to you and not your car: NCB is connected to you as an individual and not your car. This means, no matter which car you have- as long as you have been renewing your car policies before its expiry date, you can continue to benefit from a NO Claim Bonus for your car insurance.

3. Save on car insurance premium: The benefit everyone loves! Discounts! A No Claim Bonus will save you at least 20% of your annual car insurance premium.

4. Easily Transferable: In situations where you’re either changing your insurer or car, the process to transfer of your NCB is simple and hassle-free. The only thing you need to ensure is, to shift your policy before your current one already expires.

Yes, there is a way to retain your NCB even after you have filed for a claim in a policy year – by opting for NCB Protection Add-on. This add-on is an optional cover that ensures your bonus doesn’t reset if you file a necessary claim. 

Please note that since this is an optional cover, you can buy it only with a comprehensive car insurance policy or a standalone own-damage cover by paying an additional premium. Also, not every insurance company offers this benefit, so confirm with your insurer beforehand.

NCB Protection Cover Exclusions

Following are the cases where this add-on will not be applicable:

• When you have exceeded the number of claims allowed under the NCB Protection add-on.

• When any fraudulent OD claims have been made or there is any discrepancy in the facts regarding a claim. 

• The NCB will drop to 0% if you haven’t renewed the car insurance policy within 90 days of the expiry or stipulated date.

• If you try to include or remove the NCB Protection cover mid-term.

• Your car must be repaired in the insurance company’s network garage.

When is NCB Terminated?

It is seen that NCB is very beneficial. As long as you do not claim, you will continue to get the benefit of NCB protection. But if you have to claim for any reason during a policy year then you will not get the benefit of NCB in the next policy year. It is important to know that if you do not renew your existing insurance policy within 90 days from the date of expiry then your NCB will be terminated, and you will not get the benefit of No Claims Bonus anymore. Hence you should always renew your policy timely.

Is NCB Applicable to Third Party Insurance?

No! Policyholders can avail of the benefit of No Claim Bonus only with the Comprehensive policy or Own Damage cover. It means you will NOT get any NCB discount against your car insurance if you own only a third-party cover. However, making a third-party claim won’t impact your accrued NCB at the time of renewing your policy.

How to get NCB Certificate?

The next question that arises about NCB is how to get NCB certificate? At the time of buying an insurance policy, the policyholder is provided with an NCB certificate, and it now depends on the policyholder whether he makes any claims or not in the policy year. If he claims, then he will not be entitled to the NCB benefit for the next year but in case he doesn't claim for the entire year, he will be eligible for the NCB benefit.

What is Previous NCB in Insurance?

Wonder what happens if you haven’t made any claims yet and decide to sell your car in the middle of the year or, in another case buy another car?

If you buy an old car from a dealer or any third-party and if the car is eligible for NCB then you can apply for a no claim bonus transfer. In this case, all that you have to do is, write to your insurance provider informing them about the sale of your old car and request them to transfer your NCB to the new car.  
 
In case you’re now buying a new car insurance policy with Digit, all you have to do is mention your current NCB and the name and policy number of your previous insurer (if you’re buying a new car policy with us for the first time) and we’ll take care of the rest.

This depends on whether you’re buying your new car insurance online or through an agent, or offline. In case you are buying your new car insurance policy offline or via an agent, you will need to transfer your No Claim Bonus by submitting your buyer-seller agreement- Forms 29 and 30 along with a letter requesting the transfer of your NCB from your existing insurance company.

The respective insurer will then issue an NCB certificate which you’ll need to submit to your new car insurance company. However, if you’re going to buy your new car insurance online, you don’t need to do any of this. All you need to do is declare the right NCB and old policy number and name of the insurer and your new insurance company will manage the rest of the process.

Documents Required for NCB Transfer

As far as the document is concerned you have to give the following documents along with the application:

After the submission of the above documents, no claim bonus will be transferred to the new car. Based on the existing NCB certificate the customer can avail the benefit of the discount on the insurance premium for the new car.