What is the concept behind NCB in car insurance? Annually, insurance providers review the premiums of insurance policies by policyholders. Hence, you will find out that your premium increased during the renewal process. This is when NCB, also known as the No Claim Bonus comes in.
Going further, you can reduce the premium amount while renewing your auto insurance quote with the No Claim Bonus accruing. In addition, NCB gives car owners or drivers rewards for their years of no-claim filing. In the world of auto insurance, having a No Claim Bonus in your car insurance acts like a discount on the premium for the coming year, showing the acknowledgment by the insurance company of the risk-free term of the policyholder.
What Is NCB In Car Insurance?
As mentioned earlier, NCB is also known as No Claim Bonus in terms of car insurance.Furthermore, it is viewed as a discount or reward offered by insurance companies or providers to policyholders who do and will not file a claim during the term of the policy. Therefore, it is accumulated annually and usually ranges from 20% to 50% on the own damage premium component. What’s more, the No Claim Bonus is also transferable between vehicles and insurance companies as a reward for practicing safe driving and being a less-risk driver.
How Does It Work?
The concept behind NCB in car insurance is quite easy to understand. Insurers or insurance companies reward policyholders and car owners with a discount on their premium amount for every year that they are claim-free. In other words, if you go a whole year without filing a claim with your car insurance company, you get NCB. The purpose of this is to encourage safe driving practices and enable increasing discounts to be transferred between vehicles and insurance companies. Hence, if you file a claim, you will lose the accumulated NCB, unless you are protected by a separate add-on coverage.
Benefits of an NCB
Here are multiple perks that you can enjoy as a car owner with an NCB in their auto insurance quote. They include:
- Lowed premiums.
- Positive rewards.
- Safe driving is encouraged.
- Bigger savings.
- Provided to policyholders.
- Stress-free transfer.
- Continuous accumulation.
- It is transferable.
- Flexibility.
These benefits increase insurance affordability with time, contribute to financial savings, and encourage safe driving.
Things to Consider with an NCB
Before getting a No Claim Bonus or an NCB, here are some of the things that you need to carefully consider:
- NCB discounts are only accessible during policy renewals.
- Third-party coverage is not applied.
- Small claims result in bigger losses.
- Transferring No Claim Bonus follows a straightforward process.
- The NCB belongs to the policyholder and not the vehicle.
How to Calculate No Claim Bonus
Firstly, the NCB is suitable from the second year of the quote period. After the first year, if no claim has been issued or filed by the policyholder, the insurance company will provide a discount of 20% on the premium amount. This goes up to 5 successive years after it begins in the second year. For a better understanding of the way no claim bonus is calculated, use the table below:
| Age of Policy | No Claim Bonus (NCB) Percentage |
| After one year of no claim | 20% |
| After two successive years of no claim | 25% |
| After three successive years of no claim | 35% |
| After four successive years of no claim | 45% |
| After five successive years of no claim | 50% |
How to Transfer NCB to a New Car Insurance Policy
The process associated with an NCB transfer is simple. Moreover, it is possible through 3 means: through an agent, online, or offline. In addition, you need to have the required documents prepared beforehand as well. Here is a simple step-by-step guide to begin this procedure:
- Reach out to your former auto insurance company.
- Request a No Claim Bonus transfer.
- Provide the necessary documents and information.
- The insurer or insurance provider will give you an NCB certificate.
- Submit this certificate to your new car insurance company to finish up the NCB transfer process.
Documents Required
You need to have the following:
- Copy of the car delivery receipt.
- Copy of the ownership transfer certificate.
- Photocopy of the auto insurance.
- Copy of the booking receipt.
- NCB certificate.
- Transfer application.
- Buyer-seller agreement form.
When is the No Claim Bonus Feature Terminated?
Different circumstances can be responsible for an NCB termination. There are also multiple things that you need to remember as a policyholder to keep your NCB benefits active. If the policyholder files a claim during the policy term, the No Claim Bonus rights will be terminated or canceled by the insurance provider.
For instance, if you file a claim to cover the damages caused by a covered peril to your car, your NCB will be canceled. Meanwhile, if you have NCB protection coverage, your No Claim Bonus benefits will stay active. Additionally, if the insured does not renew their auto insurance within three months or 90 days from the expiring date of the policy, the insurance company will terminate the No Claim Bonus.
On the other hand, if the policy lapses, the NCB will be withdrawn or terminated by the insurance company irrespective of the premium discount eligibility and accumulation of claim-free years. Lastly, if you as a policyholder do not transfer the NCB to another vehicle or insurance company within a particular period, the insurer will withdraw the No Claim Bonus.