What is the impact of the absence of a claim on your car insurance premium?

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NCB created quite a stir. It sounds optimistic. Why? There are several explanations for this. First, understand NCB.

No Claim Bonus is abbreviated as NCB. Yes, you read that right. Prime. Doesn’t this word have the ability to boost morale on its own? This benefit, however, is not available to everyone; you must meet certain criteria to be eligible.

Keep reading to learn more about why the no claims bonus is so vital when renewing your car insurance. It is important to note that the PNE is coupled with a complete set car insurance policy rather than an autonomous third party car insurance policy.

Everything you need to know about the no-claims bonus in auto/vehicle insurance

No claim bonus is essential in the bike /car insurance because these are long term plans. Essentially, a claim bonus is awarded to the insured for each claim-free year. It is generally paid in the form of a discount at the time of renewal of the insurance. So, whether you’re buying auto insurance for your new car or renewing your existing auto insurance, being eligible for a no-claims bonus or NCB can significantly reduce your cost of insurance.

So why don’t insurance companies offer any claim bonuses in auto insurance?

Well, you drive safe for a year without making a claim throughout the car insurance political period. Your plan period is coming to an end and it’s time to renew your policy. Your insurance company recognizes that you are a safe driver and would like to thank you for not making a claim. Therefore, when you renew your coverage, the insurance company gives you a discount. This incentive is known as NCB motorcycle/car insurance.

No Claim Bonus: Benefits

Here are the main advantages of the no-claims bonus:

No Claim Bonus (NCB) will help you get a policy renewal discount. Therefore, you will have to pay a lower premium than if you did not have a PNE.

No claim premium is tied to the owner of the four-wheeled vehicle rather than the vehicle. Therefore, if you want to sell your old (covered) four-wheeler and buy a new one, you can carry over the no-claims bonus. Additionally, NCB stays intact with you if you decide to transfer your coverage from one insurance company to another.

If you follow the guidelines, the no claim bonus is incremental. Therefore, if you do not file a claim within 5 years and renew your car policy on time, you could receive a significant discount on renewing insurance for years.

No Claim Bonus in car insurance: how does it work?

As everything around you increases in price, your auto insurance gives you a unique advantage by providing you with the ability to lower your auto insurance premium rate. You might be wondering how it works, right? Let us dive!

The no claim bonus works the same way as any other bonus. It serves as both a reward and an incentive to continue the great work. If you make no claims during your first year of insurance, you will receive a 20% discount on the NCB. As a result, you continue to receive an additional 5% from your second consecutive claim-free year. This could result in a 50% decrease in your sixth consecutive year.

Thus, by including the No Claim Bonus in your auto insurance policy, insurance companies encourage you to drive carefully while discouraging you from making claims. This way, an auto insurance policy holder will think twice before filing claims for minor issues.

No Claim Bonus in car insurance: why is it so important?

No claim bonus is crucial in auto insurance since car owners spend a lot of money for comprehensive auto insurance throughout the life of the quad. The higher the bonus amount, the higher the value of the car. Since the no-claims bonus helps reduce premiums, it becomes an important feature for every four-wheeler owner.

No claim bonus discount on your car insurance premium calculation

Here’s an example: Both Mr. Sharma and Mr. Singhania purchased expensive four-wheelers of the same make, model, and make. Both paid ₹22,000 for the very first year of car insurance. Due to a decrease in the value of the car, the premium for the second year was reduced to ₹20,000.

Mr Sharma did not file a claim in the very first year of his insurance policy, but Mr Singhania was involved in a four-wheeler accident and had to file a claim for damages. As a result, Mr. Sharma got a 20% discount on the premium due for the second year (claims-free renewal), but Mr. Singhania did not because his no-claims bonus was zero.

Calculation Mr Sharma Mr Singhania
1st year premium ₹22,000 ₹22,000
2nd year premium (renewal without claim) ₹20,000 ₹20,000
Amount of the premium after calculation of the PNE ₹16,000 (20% AON) ₹20,000 (0% AON)

Please keep in mind that the previous example is for illustrative purposes only. The PNE is determined according to the own damage component of the premium payable, and not the entire premium.

Here is an intriguing possibility. If you choose an NCB protection add-on/endorsement, you can file a claim while still receiving the renewal discount. To receive the benefits of the No Claim Bonus Protection policy, you must pay a fee.

No Claim Bonuses in India: Things to Keep in Mind

Here are the important pointers associated with the no claim bonus in India:

  • When does the No Claims Bonus expire? – If the policy is not renewed (within 3 months of expiration) or an insurance claim is submitted without the No Claim Bonus add-on.
  • SOPs for commercial automobiles – Please see the insurance policy document for more details, as the terms and conditions of the no-claims premium for commercial automobiles may differ from one insurance company to another.
  • No Claim and Claim Bonus – If you declare a claim without subscribing to the NCB additional cover, the No Claim Bonus is reset to zero.
  • NCB proof – The insurance company’s NCB certificate can be used as the NCN proof.

The Key Takeaway

You should avoid filing minor claims if you want to keep your no claim bonus intact. Try paying for these claims with your own wallet. If the insurance claim is large and you wish to keep your No Claims Bonus collected, choose the No Claims Bonus protection endorsement.

If you want buy car insurance online by Tata AIG, compare car insurance premium rates by visiting our official website and selecting the plan that meets your budget and requirements. Plus, choose the No Claim Bonus protection add-on to protect your plan’s NCB even if you make a claim. Contact us for more information.

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