What Is NCB in Car Insurance?

What Is NCB in Car Insurance?

In simple terms, a No Claim Bonus (NCB) is a discount offered by an insurance company in exchange for making no claims within a given policy year. It may also be accrued over a period of time to receive a premium discount. Furthermore, since an NCB is transferable to a new vehicle purchased by the policyholder, it can be used even when an individual owner switches vehicles.

How Does NCB Work?

The NCB operates by offering a discount on the premium due when the policy is renewed if no claims have been filed. As a result, NCB aids in the reduction of annual car insurance renewal premiums. For example, if your policy offers a 20% NCB for your first claim-free year, you will get a 20% discount on your premium when you renew for the second year.

If you want to use the NCB when buying a new vehicle, here's how to go about it:

  • Selling the Old Car: This is the most crucial stage. The original car with accrued NCB can be sold to a dealer or a third party, and the NCB can be passed to the new car. Make sure that you obtain the sale invoice as well as the sale deed.
  • NCB Certificate: As a policyholder, you must notify the insurance agent that you have sold your old car. You may request that the NCB received on the old car be applied to the new car after communication. Make sure you have all of the policy and vehicle details.
  • Documents: Along with the written application, the following documents are required: 1. A copy of the delivery notice from the old car's sale, 2. A copy of the new car's booking form 3. A copy of the old car's insurance policy.

​It will take the insurance provider 2-3 working days to grant an NCB certificate after the NCB application has been submitted to them. The insurance provider will apply the NCB as a discount on the insurance premium for the new car based on this certificate.

Summing up

Here are a few more things to keep in mind now that you know how to use No Claim Bonus when buying auto insurance:

  • As long as the policyholder is the same, NCB can be moved from one car to another.
  • NCB expires if the policy is not renewed within 90 days of the current policy's expiration date.
  • At the time of renewal, NCB may be transferred from one insurance to another.
  • If a claim is made within the policy year, the NCB expires.
  • To facilitate the transfer of NCB, an NCB certificate is required.

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