What is No Claim Bonus Under A Car Insurance Policy ?
Even if car prices rise with time, car insurance prices do not have to! The prices can actually drop over the years, here’s how. It’s called No-Claim Bonus (NCB). Usually, individuals with car insurance policies are aware of this concept but are often unaware of its specifications. This becomes a major reason for dissatisfaction while renewing the policy. Discover several details of the No-Claim Bonus that everyone must understand.
First and foremost, remember that No-Claim Bonus is a kind of discount that’s only applicable on car insurance policy renewal. NCB can be considered an insurance company’s reward to the insured person for not making a car insurance claim in the previous term of the policy.
The discount of the No-Claim Bonus varies from 20% to 50% on the payable premium. One important thing to note is that it can only be achieved with a “no claim” record. An individual can be assured of a starting No-Claim Bonus of 20% upon the first renewal of the car insurance plan, taking into consideration that no claim was made in the previous term. With more and more claim-free years, the NCB discount rises. The maximum discount of 50% can be achieved at the end of 5 claim-free years.
Buying a new car does not forfeit your No-Claim Bonus privileges
It is exciting to know that No-Claim Bonus discounts are applicable to the insured person and not the cars. If you purchase a new car, then you don’t lose the NCB discounts earned over the years. You can simply transfer the discounts to your new car. Do make a note that NCB discounts cannot be shared between two people unless the car owner passes away.
No-Claim Bonus isn’t calculated on the entire premium
Third-party car insurance is a fundamental covert that is mandated by the government. No-Claim Bonus is not applicable for this insurance premium amount. Generally, the third-party insurance premium is more or less up to 20% of the entire premium amount of the comprehensive car insurance policy. Hence, the No-Claim Bonus will be computed on the overall insurance premium subtracting the third-party premium. Mostly, people fail to take this into consideration and think that the No-Claim Bonus was miscalculated. Thus, keep this important thing in mind while calculating your No-Claim Bonus!
Do not declare wrong No-Claim Bonus value to insurance companies
If you intentionally or unintentionally mention incorrect No-Claim Bonus while changing insurance policies, then the final results would be serious. If you mention incorrect value, then the claim settlement process can get affected when you make a car insurance claim. Thus, be very mindful while mentioning the No-Claim Bonus value.