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What does No Claim Bonus in car insurance mean?

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Learn how safe driving can lower your car insurance premiums with the No Claim Bonus (NCB).

Car insurance is not only a legal requirement but also a wise decision to protect your vehicle and finances during unexpected events. While buying a car insurance policy, you'll often come across the term 'No Claim Bonus' or NCB. But what exactly is NCB, and why is it important for car owners in India?

Understanding No Claim Bonus (NCB)

No Claim Bonus, or NCB, is a unique car insurance feature where the insurer offers a discount during renewal if the policyholder has not filed any claims throughout a policy year. It translates into a reduced premium amount and, in a way, rewards policyholders for being responsible and safe drivers.

How Does NCB Work?

NCB works on a simple principle: the longer you go without making a claim, the higher your NCB discount. Typically, NCB accumulates over consecutive claim-free years, starting at 20% for the first year and increasing incrementally each year, reaching a maximum of 50% after five consecutive claim-free years. For example, if you have a car insurance premium of ₹20,000 and accumulated an NCB of 40%, you'll receive a discount of ₹8,000 on your premium during the policy renewal.

Other benefits of NCB

While protecting you financially, NCB also has some other benefits. It's transferable between insurance companies. So, if you decide to switch providers at the time of policy renewal, you can carry forward the NCB. Similarly, it can be transferred to a new car since the insurance belongs to you and not the vehicle. So you can explore better insurance deals without losing your hard-earned NCB.

To further safeguard your NCB, many insurance companies offer an NCB Protection add-on that allows you to make a certain number of claims during the policy year without losing your NCB. It provides extra security, ensuring that a single claim doesn't erase your NCB and the associated premium discount.