When renewing your motor insurance, consider changing your insurer for various reasons. However, you may wonder what happens to your No Claim Bonus (NCB) when you switch to a new insurer.
In this post, we will explore the implications of changing insurers on your NCB. We will also discuss whether NCB in vehicle insurance can even be transferred, the process of transferring your motor insurance NCB from one insurer to another, and how to leverage your NCB to save on premiums for a new vehicle. Let's dive into the details against the backdrop of the relevant aspects of the Motor Vehicle Act of 1988.
What is the No Claim Bonus (NCB) in vehicle insurance?
The No Claim Bonus is a notable benefit and reward given by insurance companies to policyholders who have not made any claims during the policy period of their bike insurance or car insurance. It serves as an incentive for safe driving and responsible vehicle ownership. The NCB accumulates each year of not filing any claims, leading to a reduction in the premium at the time of renewal.
NCB acts as a reward for practising safe driving habits. By avoiding damages to their vehicles and not filing any claims throughout the policy term, policyholders can accumulate NCB. This promotes responsible vehicle ownership behaviour, as it incentivises vehicle owners to prioritise safety on the road.
Can NCB be transferred from one insurer to another in vehicle insurance?
Yes, the No Claim Bonus earned in your car insurance is transferable to a new car as it is given to the policyholder, not the vehicle. If you purchase a new vehicle or switch to a new insurer, the accumulated NCB can be transferred, ensuring the policyholder continues to enjoy the benefit of reduced premiums. This adds flexibility and value to the NCB. It allows you to leverage your claims-free record, irrespective of the vehicle brand or insurer.
According to the Motor Vehicle Act, insurers are required to provide the option to carry forward the NCB when switching policies. Inform your new insurer about your NCB and provide the necessary documentation to ensure a smooth transfer.
Benefits of transferring NCB from one insurer to another
Transfer of NCB when switching insurers in India offers several benefits:
a) Continuity of Benefits: By transferring the NCB, you can retain the advantages earned through your claims-free record. This translates into substantial savings over the policy's duration, making insurance more affordable.
c) Flexibility: NCB transfer provides you with the flexibility to choose a new insurer that best suits your requirements without losing the benefits of your accumulated NCB.
d) Reward for Safe Driving: NCB transfer reinforces the importance of safe driving practices. It is advisable to maintain a claims-free record, as it results in lower premiums.
How to transfer your NCB from one insurer to another
To transfer your NCB from one insurer to another, follow these general steps:
a) Inform your current insurer: Notify your existing insurer about your decision to switch and request the NCB certificate.
b) Obtain the NCB certificate: Your current insurer will issue an NCB certificate that verifies your accumulated bonus. This serves as proof of your claims history and entitlement to a reduced premium.
c) Share the NCB certificate with your new insurer: Present the NCB certificate to your new insurer when applying for a policy. This will enable it to factor in the NCB and provide you with the appropriate premium discount.
d) Confirm the NCB transfer: Ensure that your new insurer acknowledges and applies the transferred NCB. Verify that the premium reflects the relevant discount.
Factors to consider when transferring NCB from one insurer to another
Here are some factors to consider when transferring NCB to another insurer:
Maximising NCB savings on a new vehicle
When purchasing a new car or bike, make use of your accumulated NCB from the sale of your old vehicle to reduce the premium for your new car insurance policy. By providing your new insurer with the necessary documents and proof of your NCB, you can reduce the financial burden of insuring a new vehicle.
NCB on third-party car insurance
Remember, NCB does not apply to third-party car insurance. If you want to benefit from it at the time of your motor insurance renewal, opt for comprehensive car insurance, with third-party coverage as an add-on. This may differ across insurance providers. Check the finer details of your policy document to be sure.
Don't claim minor damages to your vehicle
Avoid claims for minor accidents that you can pay out of your pocket. If you don't make claims for a whole year, it will reduce your premium in the upcoming motor insurance renewal with the new insurer.
Renew your car insurance on time
If you wait more than 90 days to renew your existing policy past its expiration date, the new insurer may terminate any NCB benefit that has accumulated. You will have to wait another year without claims to gain NCB. Further, you will also lose out on lower premiums at the time of policy renewal with the new insurer and your current insurer.
Premium discount based on your NCB slab
Expect a premium discount in the range of 20% to 50% from your new insurer after the NCB transfer, depending on how many years have gone by without any claims. Renewing after one claim-free year, gets you a 20% discount, after two years - 25%, and so on till you reach your 5th claim-free year, after which NCB remains at 50% of the premium.
Documents requested at the time of NCB transfer
The NCB transfer process from one insurer to another is usually smooth, but it is essential to have all the required documents handy at the time of transfer.
These are as follows:
(a) your NCB certificate
(b) copy of the sale of your old car
(c) motor insurance policy document of your vehicle (old or current)
(d) purchase copy/booking form for the new car
Summing Up
The Motor Vehicle Act mandates insurers to facilitate the transfer of NCB from one insurer to another. By following the necessary steps and providing the NCB certificate to your new insurer, you can ensure a seamless transfer and retain the benefits earned through your claims-free record. When changing insurers at the time of motor insurance renewal, your NCB can be preserved and utilised to reduce premiums on your new policy. Leveraging your NCB can result in significant cost savings, particularly when purchasing a new vehicle. As the discount percentage increases with each consecutive year, you can enjoy progressively lower premiums.
