A car insurance policy extends financial protection to the vehicle owner. The law has mandated every vehicle owner to buy new car insurance at the time of purchase of the vehicle. Moreover, four-wheeler insurance protects your car from natural and man-made calamities. Natural calamities are those which are beyond the control of humans. These include flood, cyclone, fire and earthquakes, whereas you can classify thefts, riots and other damage under man-made calamities.
The extent of coverage depends on the policy availed. There are broadly two types of policies, comprehensive insurance and third party car insurance. A third party policy covers the legal liability arising out of injury or damage to a third person and/or property. As the name suggests, comprehensive policy insures the vehicle as well as the third-party liabilities. You can also opt for add-ons to widen the scope of your policy. These can offer protection over and above the basic features and aid in creating customized solutions.
You are less likely to be involved in accidents by following safety measures and traffic rules. When you make no claims in a year, the insurance company rewards you with a No Claim Bonus (NCB). The bonus gets converted into a rebate at the time of renewal. Thus, you enjoy concessional premium rates when you renew a car insurance policy.
NCB for new car insurance
NCB is transferable and may be claimed while buying a new vehicle. Thus, if you are desirous of buying a new car, you can follow this step-by-step guide to avail the NCB.
Put up the old car for sale:
You can sell your old car to a dealer or a third party. You must ensure to have the delivery note on records, as it is a confirmation of the sale transaction. Also, ensure that the sales deed is executed and documented in your file.
Get the NCB certification:
Next, you need to intimate the insurance company about the sale. Give the insurer a written communication about wanting to use the NCB of the sold vehicle. Also, support the intimation with the details of the existing policy. The application should be submitted along with the requisite documents.
The insurer may issue the NCB certificate within a few working days. Based on this certificate, you will be given a relevant discount. The NCB certificate is mandatory for transferring the NCB from the old vehicle.
Submit all relevant documentation:
Take care to back the request for availing the NCB of the old car with the following documents.
- A copy of the delivery note
- A copy of the booking receipt of the new car
- A copy of the insurance policy of the old car
You must submit the supporting details as required by your insurer. Timely submission makes the process faster and simpler.
Understanding the mechanism
You may consider the below illustration to understand how NCB works.
Mr A has a car insurance policy. He would be entitled to a no-claim bonus of 20% provided there is no claim raised during the policy term. Mr A can avail the first renewal against a premium of Rs 15,000. Since he had not made any claims, Mr A becomes eligible for the discount. Thus the premium now payable works out to Rs 12,000. He thus enjoys a saving of Rs 3,000 owing to the NCB.
NCB on own damage premium increases progressively in every subsequent year. It ranges from 20% to 50%. The maximum rebate of 50% gets applicable for policyholders having a no-claim history of five years. You can claim the bonus at the next renewal date. If there is a claim raised during the policy period, the NCB will lapse. Also, the bonus expires if the policy is not renewed in time.
Benefits of NCB
NCB offers various benefits to you. Some of these are listed below:
Offers concessional premium rates:
NCB is translated into discounts. You can thus avail premiums at a concessional rate. The rebate is accounted for at the time of renewal of the policy.
Guarantees your ability as a driver:
You may recognize NCB as a reward for being a safe driver. Having a no-claim history indicates that you abide by the safety protocols and traffic rules.
Sticks with the policyholder and not the vehicle:
NCB is granted to the vehicle owner and not the car. When you sell your old car, the NCB is accumulated in your name. The bonus is not linked to the vehicle and is hence not transferred to the new car owner.
Transferable to another car:
You can transfer and claim the NCB that has accumulated over time. The bonus of the old car sold can be claimed when you take the new car insurance. Moreover, NCB can usually be transferred from one insurer to another insurer.
To sum it up
To summarize, NCB is the benefit received for not making any claims. It aids in availing insurance against a discounted premium. Hence, it is important to understand the terms of NCB while availing a car insurance policy.