NCB stands for No-Claim Bonus. As the name indicates, it is a bonus for not making a claim. It is a sort of reward for good drivers.
The discount can go as high as 50% of your Own Damage Premium. Your car insurance premium is split into 2 broad components – Own Damage & Liability Premium. The discount is on the Own Damage Premium part.
So let me explain this with the help of an example.
Suppose your car insurance premium is as follows:
Own Damage Premium = Rs. 8,904 (A)
Liability Premium = Rs. 1,250 (B)
Total Premium = Rs. 10,154 (A) + (B)
Now suppose you are eligible for a No Claims Bonus of 50%, then the Own Damage Premium will be 50% of Rs. 8,904.
And hence the total premium will be as follows:
Own Damage Premium = Rs. 8,904
Less NCB @ 50% = Rs. 4,452 (A)
Liability Premium = Rs. 1,250 (B)
Hence total premium will be Rs. 5,702 (A) + (B)
Now how do you know how much of NCB you are eligible for?
- It’s fairly simple and follows this table.
- If you have not made a claim in 2 consecutive years, you get a discount of 25% on your Own Damage or OD premium
- If you have not made a claim in 3 consecutive years, you get a discount of 35% on your Own Damage or OD premium
- If you have not made a claim in 4 consecutive years, you get a discount of 45% on your Own Damage or OD premium
- If you have not made a claim in 5 consecutive years, you get a discount of 50% on your Own Damage or OD premium
In case you make a claim, the NCB drops to NIL.
Also remember, the NCB is given to the driver and not to the vehicle. So you can transfer the NCB to a new car you have purchased. But this is possible only in case the new car is of the same class as the old car. So in case your old car and the new car is a sedan, you can transfer your NCB. The NCB is valid for 3 years from selling off your old vehicle. You will need to write to the insurer and get the NCB certificate from them.
