NCB vs No Claim Bonus Protection: Which Option is Better for You?

Posted on: Mar 4, 2025 | 3 mins | Written by: HDFC ERGO Team

NCB vs No Claim Bonus Protection: Which Option is Better for You?

NCB may sound like a new term to you and while it may sound fascinating, you must understand what it means before you avail it. NCB in insurance stands for No Claim bonus.

Now, while that may sound really exciting, there are some terms and conditions that you will have to adhere to. No Claim Bonus in insurance isn't available for everyone. In order to avail of these benefits, you should meet the terms and conditions stated.

Let's explore what is NCB in insurance, why NCB is important and which option is better for you in case of bonus protection.

What is NCB?

NCB applies to no-claim bonuses in insurance. Determining vehicle and health insurance is essential, as these are long-term insurance policies. NCB refers to a discount on insurance premiums.

NCB is given to insurance policyholders who did not file any claim and managed responsibility, especially during the policy tenure. It can bring about significant differences in the premium that you're paying. However, if you make any claim during the period, NCB may either reset to zero or decrease the credits depending on the NCB renewal.

What is NCB in Car Insurance?

If you drive safely throughout your period, you will be eligible for receiving NCB in car insurance. When the policy period ends and the renewal time comes along, the insurer will acknowledge you as safe driving. Therefore, they're likely to provide NCB in car insurance. This is a reward for not raising any claim.

Benefits of NCB

A no claim bonus in car insurance can be extremely beneficial in the long run. Some of the common benefits of NCB are as follows:

1. Discount

Discounted premiums are one of the main perks of NCB, mainly when you apply for insurance renewal. As a result, you will have to pay less than what you were already paid as compared to the past premium. Therefore, the price for the claim period will be significantly lower.

2. Earn Rewards

With the help of NCB, you will be able to earn rewards for maintaining your car in proper condition. This is crucial, especially when you're driving safely. This adds to valid proof when you're making no claim for the car insurance policy. As a result, if you have a good driving history, you'll be able to earn rewards.

3. Transferable

If you are planning to buy a new car, you will be able to transfer NCB to the new policy as well. But what if you plan to switch insurers? You can do the same by just transferring the NCB.

4. Granted Directly to the Policyholders

All the perks of NCB will be granted directly to the policyholders. They will not be provided to the insured vehicle. If you plan to sell the car in the future, NCB in car insurance will still tend to be intact. Now that the NCB is granted to you and not the vehicle, it will not be transferable to the new owner of the vehicle.

What is the Importance of NCB?

The importance of NCB can be determined, especially in terms of budget. However, the process of transferring NCB can be slightly complicated, which is why you will need to look into all the details carefully.

Now that you're aware of how important NCB is, you must understand how to transfer it. There are usually three methods for transferring NCB: online, offline, and via an agent.

You will have to connect with the insurance provider so that you can understand the transfer process. You will also have to acquire additional details for the NCB, like the policy number, former motor insurance company name, and more. Once all the information is provided, the transfer will be successfully completed.

Should You Get No Claim Bonus Protection?

You may get no-claim bonus protection, considering the wide range of benefits it offers. However, the benefits will not be applicable if you apply via a third-party insurance agent. Adding no-claim bonus protection to your insurance ensures that you will get an additional discount.

Things to Know About NCB in Insurance

Once you plan to opt for NCB in insurance, you will have to understand a few things. These include the following:

1. The minimum discount rate is 20%, whereas the maximum is 50%. However, this will completely depend on the number of claim-free years.

2. When you switch your policyholder, you will have the option to transfer the NCB for the same car.

3. NCB will apply to only its own damage premium. It will not apply to any third-party premiums.

4. When renewing your car policy, it is essential to understand and consider the NCB in car insurance.

NCB or No Claim Bonus Protection in Insurance: What Should You Choose?

When choosing between NCB and No Claim Bonus insurance for your car, you must understand the benefits each offers. This will provide an added advantage of how to proceed forward and what to choose. Usually, it is advisable to get no-claim bonus protection to save on the extra money you may spend.

The no-claim bonus protection cover will ensure that whatever bonuses you earn are completely protected. Policyholders will be able to avail themselves of some reduction in renewal premiums. However, the reduction they receive completely depends on the bonus they earned throughout the policy period.

If you want to purchase the No Claim Bonus Protection, you will have to pay an extra amount. This can range between 5% and 10% of the base policy premium. However, it will definitely help you save a significant sum in the long run.

Final Words

NCB in car insurance is for everyone, considering the wide range of benefits it has to offer. However, you should check with the insurer to understand the terms and conditions to get your hands on the right policy. Furthermore, you should consider getting a protection cover because of all the advantages and reductions in premiums you get. Therefore, think, research, and make the right choice.

FAQs

1. Should you pay extra for no claim bonus?

If you are tense about potential accidents, a no-claim bonus can be very helpful. This valuable addition can contribute to significant discounts in the long run, so it's worth paying a little extra for it.

2. What happens if I don't protect my no claim bonus?

If you do not protect your no-claim bonus, you are likely to lose it. The insurer usually provides this bonus, so you will have to look for it.

3. For how many years can I have the no claim bonus?

The number of years for which you can have the no claim bonus depends on the insurance provider you're taking it with. Consider discussing the age of policy and percentage so as to make the right choice.

4. What is the best rating for a no-claim bonus?

Rating 1 is said to be the best rating for a no-claim bonus. This is usually the maximum discount that is available. However, you may discuss this with your insurance provider for further information.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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