When you make a claim on your car insurance policy, you lose a discount called the no claim bonus. This is a bonus that you get for being a good driver and not making any claims in a particular policy year. You get the reward as a discount on the premium when you renew car insurance online. Take a look at this article to know more about the no claim bonus component and how it can affect the premium of your policy at the time of renewal.
Understanding NCB
So, what exactly is the no claim bonus? NCB, as it is popularly known, is a discount you earn for not making claims on your car insurance online/offline plan. When you complete an entire policy tenure without a single claim, the insurance provider offers a discount on the premium of the following year. The NCB piles up and for every year you don’t make a claim, it accumulates in your account. The NCB can go up to 50%. If you don’t make a single car insurance claim for five straight years, you will only have to pay half the premium of the car insurance policy when you renew it for the sixth year.
Claims and NCB
As the name suggests, it is a bonus you earn for not making a claim. Quite understandably thus, you lose the advantage if you make even one small claim. Even if you have four years’ worth of NCB piled up, a claim in the final year can deplete the entire amount and reset the figures to zero.
Claims and car insurance premium
Here is a look at the percentages of NCB that you stand to get for claim-free years in an annual policy.
| Years without claim | Percentage of NCB |
| 1 | 20% |
| 2 | 25% |
| 3 | 35% |
| 4 | 45% |
| 5 or more | 50% |
So, if your car insurance premium is Rs 2000 for one year, and you have 50% accumulated NCB, you only have to pay Rs 1000 when you renew car insurance online for the current year.
Aim of NCB
So why does the insurance company offer you the NCB when you go for a renewal of your car insurance online plan? Well, there are some pretty logical reasons behind this. They are:
-
Encourages you to drive safely:
NCB might encourage you to drive carefully and avoid getting into situations that can lead to car insurance claims. The no claim bonus component, therefore, inspires you to be a responsible driver and avoid rash driving.
-
Discourages you to make small claims:
At times, the car repair costs are so low that you can easily beat them. The insurance providers dissuade you from making small claims every now and then by offering the NCB. This helps you to preserve your insurance coverage and use it when there is a real and large requirement for it.
-
Encourages you to renew car insurance on time:
To keep your accumulated NCB in play, you need to renew car insurance online on time. If you let your policy lapse and cross the 90-day grace period, you will end up losing all your NCB. So, you should always renew on time and stay protected as that is a crucial thing to do.
These are the main reasons why you get an NCB advantage of car insurance online.
The bottom line
There are many ways in which you can save money when you renew your car insurance plan. Using your NCB wisely is one of them. So be a good driver and make your claims wisely. If you can go a whole policy year without making a claim, you will earn a handsome car insurance premium discount at the time of the next renewal. Use it and save money while keeping the car under the best possible car insurance umbrella.
