If you own a vehicle, then you may be owning a vehicle insurance policy; one that protects you from legal and financial hassles in case of any damages that happen to yourself, your vehicle or any losses that may be incurred by a third party individual or vehicle. In the event of unforeseen circumstance, you would need to inform your insurer and register a claim. Your insurer bears the burden of financial responsibilities that arise due to an accident. But what happens if you have an insurance policy and make no claims on it, year after year? You become eligible for a no claim bonus. Here is everything you need to know about a no claim bonus or NCB.
What is NCB in vehicle insurance?
Insurers can offer a reward or incentive to drivers for following traffic regulations and safe driving. This reward is essentially a bonus that is provided for every year in which an individual does not make any claim on his insurance policy and is known as a no claim bonus. The no claim bonus is offered when one renews his/her policy. The amount payable is determined at time of policy renewal by subtracting the no claim bonus discount from the total premium payable.
How to calculate no claim bonus for vehicle insurance?
If you have a valid vehicle insurance and have not made any claims in a year, your insurance provider offers you a discount on your insurance premium when you renew your policy the following year. The no claims reward scheme typically begins in the second year from when you first purchased the policy.
Things to remember about no claims bonus
The NCB belongs to the policy holder not the vehicle – NCB is linked to the policy holder and not his vehicle, so if you sell your old vehicle and buy a new one, you can easily transfer your NCB to your new vehicle. You can make this transfer either by opting for the same insurance provider or by choosing a new one altogether. The procedure of the transfer of NCB is quite simple – you would just need to provide proof that no claims were made.
NCB can be availed at policy renewal – NCB discount can be claimed only when you renew your insurance policy. You are not eligible for any discount when you purchase insurance for the first time.
NCB does not apply to third party cover – NCB car insurance applies on to the own damage part of the insurance premium. The bonus cannot be availed on third party insurance.