No Claim Bonus: How can I transfer my NCB to a new car insurance policy?
By Deepak Yohannan
A No Claims Bonus (NCB) is a discount offered to parties who do not claim on their auto insurance policies over a given period. This monetary reward is extended to people who drive carefully and do not seek regular payouts from their insurance company on a regular basis.
Why do insurance companies offer a No Claims Bonus? They do so because people who rarely or never file claims are less of a financial burden on the insurer. The insurer rewards their low-risk status through discounts. This in turn acts as an incentive for not filing for minor claims.
No Claims Bonus: How it works
Generally, an NCB comes into play when you go to renew your existing car insurance policy. You will earn such a bonus if you have not filed a claim over a given period. The rates vary depending on the duration of the claim-free period. If you have not filed a claim over a period of 12 months, you can earn a discount of 20% on the premium of the renewed policy. The percentage of this bonus goes up to 25%, 35%, 45% and 50% provided you do not claim on your policy for periods of 2, 3, 4 and 5 consecutive years, respectively.
New car? Transfer your NCB
An NCB comes into play when you replace your old car with a new one. At this time, you are faced with two options:
1. You can transfer the insurance on your old car to the buyer and get a no claims certificate from the insurer. This certificate can even be used at a later date, when purchasing insurance on a new car. Some people prefer to use the certificate to receive a discount on the new car insurance premium while others ask for a refund of the same amount.
2. You can hold on to your existing insurance policy rather than transfer it lock, stock and barrel to the buyer of your old car. This policy, complete with its NCB, can be used to avail of a discounted deal on insurance for the new vehicle.
NCB Transfer: Things you must know
1. Validity of a No Claims Certificate: A no claims certificate is usually valid for a period of 3 years. So, you need not buy a new car right away, although you should keep your insurer in the loop about your car purchase plans.
2. An NCB is yours alone: While auto insurance policies can be transferred from one person to another – such as a spouse or the buyer of your old car – the same principle does not hold for an NCB. An NCB is provided only to the person holding the insurance policy. It cannot be transferred to a different driver because it does not apply to the vehicle, only to the owner.
3. The same class of vehicle: You cannot transfer an NCB from a four-wheeler to a motorcycle or vice-versa. The bonus only holds for vehicles within the same category.
An NCB is a great way to save on car insurance premiums. If you are cutting corners, working towards an NCB could help. The potential for savings is huge!
(The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal)