The no-claims bonus an important factor in your auto insurance policy

Owning a vehicle in India is not only a matter of pride, but it also brings a feeling of independence. You use it for commuting to work, for daily shopping, for taking your family to the movies and the mall, and even on vacation.

However, owning a vehicle can also be a costly affair. After all, it’s one of the costliest investments most middle-class families make in their lives, right after buying a home. Add to that the recurring cost of an auto insurance policy, which is not only crucial in ensuring the safety of your beloved vehicle, but is also required by law.

It is therefore only natural if you are wondering about the means to save on this recurring cost. You can do this as long as you don’t lose sight of the big picture and compromise the protection of your motor vehicle. And that’s where the No Claim Bonus (NCB) comes in and serves as a way to strike that balance between having the right coverage for your car while making sure insurance premiums don’t get out of hand.

As things get expensive from year to year, the No Claims Bonus makes your insurance policy premium more affordable every time you renew it. Of course, this advantage comes with certain conditions.

What is a no claims bonus, you ask? As the name suggests, this is a discount on the vehicle insurance premium that you get when you renew as long as you drive safely and don’t make an insurance claim for a year of insurance. So essentially this perk rewards you for safe driving and the more crash-free and insurance-claim-free you ride, the higher the NCP you get.

You can, in fact, save up to half of the annual premium of your auto insurance policy by effectively using the No Claim Bonus each year. In accordance with the standards in force in India, you can benefit from a no-claim bonus of 20% on your premium if you do not make a claim for one year. For the next two years without a claim, this premium increases to 25 percent; 35 percent for three years, 45 percent for four years, and finally, 50 percent premium discounts for five years without loss.

However, as soon as you submit a claim, the accumulated NCB lapses and you will need to make the full premium payment at the next policy renewal. So sometimes for minor repairs you can even pay out of pocket if you feel the cost of the repair is less than the no-claims bonus you would forfeit if you made a claim. On the other hand, many insurers also offer the option of getting a payable NCB retention rider, or add-on feature, in which you can keep the accumulated no-claim bonus up to a certain specified limit even if you do. a claim.

Besides making a claim within an insurance year, another reason the NCB is terminated is if you do not renew your auto insurance policy within three months of the expiration date of the insurance. current font. So, in order to get the most out of the No Claim Bonus, it is crucial that you renew your auto insurance policy on time and not let it expire.

While the PNE feature is a great way to save on insurance premiums, many policyholders are often stuck with an insurer even if they are not happy with it because they think they would lose the entire amount. PNE accrued if they transferred their vehicle’s policy to another insurance company. . However, most insurance companies today allow the no-claim bonus to be transferred when you switch from another insurer to them.

In addition, the No Claim Bonus is not specific to the vehicle but specific to the driver. This basically means that even if you sell your car or two-wheeler and after using it for a few years and then buy a new one, you can get the No Claim Bonus accrued on the insurance premium of your new one. motor vehicle. All you need to do is provide a copy of your old vehicle’s transfer of ownership certificate along with the old registration certificate, as well as a written request to transfer the NCB to the new policy. You must also obtain the NCB certificate of your previous insurance policy from the insurance company, which is usually valid for up to three years. You can transfer the NCB to the new auto insurance policy at any time during this period. This would reduce the cost of insuring your new car. So, whenever you are selling an old car, it is a good idea to get the NCB certificate issued in your name.

The author is CBO-GI at The opinions expressed are those of the author.

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Justin D. O'Neill

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