How No-Claim Bonus Can Cut Your Car Insurance Costs in Half

In India, many people treat car insurance as just a formality. We get it either to avoid challans or to protect the car after an accident. We bargain hard for every rupee. Whether it is at the service centre, petrol pump, or parking lot. However, when it comes to car insurance, most of us miss out on one of the most valuable discounts, namely the no-claim bonus. And that usually happens because we do not know how or when to use it.

Let us understand what a no-claim bonus in car insurance really is and how you can make full use of it.

What is No Claim Bonus in Car Insurance?

The no-claim bonus, often called NCB, is a reward given to policyholders who do not raise any car claims during the policy term. This reward is given in the form of a discount on the own-damage premium portion of your vehicle insurance policy. It does not apply to the third-party liability premium, which is fixed and mandatory by law.

NCB begins at 20 percent after one claim-free year and can go up to 50 percent after five consecutive years without any car insurance claims. This discount is only applicable to the own-damage part of your comprehensive insurance and can lead to major annual savings.

For example, if your own-damage premium is ₹10,000 and you are eligible for a 50 percent NCB, you will save ₹5,000 right away.

If you are buying a new car, carrying forward your no-claim bonus can bring down your car insurance premium by nearly 50 percent.

But What If I Get a Dent in the First Year?

If it is a small dent or scratch, it might actually be smarter to get it fixed through an outside mechanic and not file a claim. Why? Because even one small claim can reset your no-claim bonus to zero. So, unless the repair cost is higher than your bonus savings, you are better off paying out of pocket.

Your NCB is Linked to You, Not to the Car

Many people mistakenly believe that the no-claim bonus is attached to the car. However, that is not true. It is linked to the individual who holds the car insurance policy, not the vehicle itself. This means that if you sell your old car and buy a new one, you can transfer the same NCB to your new insurance car policy. The NCB only applies to comprehensive insurance, not third-party plans.

However, you must complete a few formal steps to ensure the NCB is correctly transferred to your new car insurance policy.

How to Transfer Your No-Claim Bonus to a New Car

The process to transfer your NCB is simple and important.

Here is what you need to do:

1. Get a Sale Confirmation Letter
    

First, you must collect a letter from the buyer confirming the sale of your old vehicle. If the transfer of ownership is done through the RTO (Regional Transport Office), you may get an official confirmation from there.

2. Provide Previous Policy Details
    

You must submit a copy of your previous car insurance policy, which shows a clear record of no claims made in the last policy term.

3. Submit a Declaration
    

Next, you need to fill out an NCB declaration form to confirm that no car claim was made during the last policy year.

4. Receive NCB Transfer Certificate
    

After verifying the details, the insurance company will issue an NCB transfer certificate. This certificate allows you to transfer your earned discount to the car insurance policy of your new car.

5. Share Certificate With New Insurer
    

You need to share both the soft and hard copies of the certificate with your new insurer. This can usually be done online through the insurer’s portal or by email. Once verified, the updated NCB will be applied to your new policy.

The NCB transfer certificate remains valid for up to three years. So even if there is a gap between selling your old car and buying a new one, your NCB benefit does not vanish. However, the new car must be registered in the same name as the old policyholder. If the names do not match, your NCB transfer request may be rejected.

Also, note that the NCB can be transferred only when buying a brand-new vehicle. It cannot be used when buying a second-hand or pre-owned car.

What Happens If You Do Not Transfer Your NCB?

If you forget or delay the NCB transfer, you may lose all the benefits and start from zero again. This would mean a much higher car insurance premium than you actually need to pay. So, if your previous NCB was 35 percent, and you fail to transfer it, you will miss out on this discount and your new policy will begin with no bonus applied.

Always ensure that the exact discount percentage, or NCB slab, is transferred to your new policy.

NCB Protector in Car Insurance

An NCB Protector is an add-on cover you can include in your car insurance policy. It allows you to make one or two car claims in a year without losing your no-claim bonus.

This means your NCB stays safe even if you file a claim for minor accidents or repairs. However, the number of allowed claims may vary from insurer to insurer, and it is available only with comprehensive insurance.

When is No Claim Bonus Terminated?

Your no claim bonus can be terminated if you make a car insurance claim during the policy period without having an NCB protector. In such cases, your bonus resets to zero at the time of policy renewal.

The NCB also expires if your vehicle insurance policy is not renewed within 90 days after the expiry date. A break in the policy leads to a loss of NCB benefits.

5 Mistakes That Can Wipe Out Your No-Claim Bonus

1. Letting your policy lapse

If you do not renew your policy within 90 days of expiry, your NCB benefit is gone. Even if you have been driving claim-free for years, the bonus will not carry forward if you miss that window.

2. Thinking the bonus belongs to your car

It does not. The NCB is linked to your name, not to the vehicle. When you sell your car or buy a new one, you need to officially transfer the bonus. Most people skip this step because they are not told about it.

3. Not asking for the NCB certificate

When changing insurers, you have to request the No Claim Bonus certificate from your previous insurer. It is not given automatically. Without this document, the new insurer will not apply the discount.

4. Choosing third-party insurance only

The NCB applies only to the own-damage portion of your car insurance. If you only have third-party coverage, your NCB benefit will not be used, even if you have a perfect claim-free history.

5. Assuming small claims do not affect the bonus

A single small claim, even for a dent or mirror damage, can bring your bonus back to zero. If the repair cost is less than your NCB savings, it is usually smarter to pay from your pocket and protect the bonus.

Final Thoughts

The no claim bonus in car insurance is a proof of your disciplined driving and claim-free record. It can save you thousands of rupees every year. However, this benefit is often lost simply because many insurance car buyers are unaware of how to transfer it.

So, if you are selling your old car and planning to buy a new one, do not forget to transfer your NCB. It is your well-earned reward for driving safely and responsibly. Let your new car insurance policy reflect that.

No Claim Bonus on Car Insurance- FAQs

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