Tips & Tricks to Keep Your NCB Bonus Intact

Posted on: Oct 7, 2024 | 3 mins | Written by: HDFC ERGO Team

Tips & Tricks to Keep Your NCB Bonus Intact

Modern-day car insurance has become very evolved and polished. As a customer, you get several rewards and benefits beyond the basic coverage offered by the insurance provider. This is highly beneficial and you get to save a lot of your hard-earned money, along with your precious time and effort. One of these benefits is the no-claim bonus. No claim bonus, popularly known as NCB, is one of the handiest rewards of car insurance. It is an appreciation you get from the insurance provider for not making any claim in an entire policy term. To reward you for your cautiousness and impeccable driving skills, the insurer offers a discount on the following term’s premium. This discount accumulates for every claim-free year. However, even one claim can bring it back to zero. To protect your NCB, you can follow certain guidelines. Take a look at this article to know more.

Why is it important to safeguard the no-claim bonus?

As stated, the NCB accumulates with time. Here is a table to help you understand the values of the NCB over a period of time:

Claim free year(s)	Percentage of NCB
1	20%
2	20%
3	35%
4	45%
5	50%

Hence, at the end of 5 years, you can get up to 50% discount on the premium of your car insurance policy. This can lead to huge savings and allow you to have comprehensive coverage at a fraction of the cost. This can make your motor insurance cost-effective and help you stick to your budget.

The NCB is also beneficial as it makes the roads safer for everyone. When you have accumulated some NCB and want to safeguard it, you will make a conscious effort to stay out of road accidents. The same feelings run through the heads of other drivers as well, and this makes driving safer for everyone. Also, a car that doesn't get involved in too many mishaps works better and lasts for a longer time, thereby highlighting the importance of this bonus yet again.

For all these reasons, you should make an active effort to drive smartly and avoid making any claim on your comprehensive motor insurance policy.

What happens when I make a claim?

As soon as you make a claim, your NCB drops back to zero. This happens irrespective of how long you have been able to maintain a claim-free streak. It can be heartbreaking for you to lose your accumulated bonus in just one go, but that is what a claim will do. Thankfully, there are some clever ways in which you can protect this bonus.

How to retain no-claim bonus?

While everyone strives to be a good driver and avoid road accidents, at times, the situation goes beyond the driver’s control, leading to a mishap. You cannot avoid such happenings always and so, may end up claiming your motor insurance policy. You can still preserve your NCB after such an incident by following these intelligent tips and tricks:

1. Get an NCB protection rider

When you buy a comprehensive car insurance plan, you get to purchase many handy riders with it. A rider is an add-on cover that you can buy at an added cost. Riders help you to customise your plan as per your exact needs. The NCB protection rider is one of the most popular riders in car insurance. Here, you get to safeguard the NCB, even if you make a claim. Let us understand this with an example. Shikha Yadav bought a comprehensive motor insurance plan in 2019 and ever since, did not make a claim on the plan. She was due to renew your plan for the fifth year in April 2024 and was excited about getting a 50% discount on the premium with the help of the accumulated NCB. Unfortunately, in February 2024, on her way to work, her car got hit from behind by a bus. Left with no other option, she was forced to make a claim. Thankfully she had an NCB protection rider, with the help of which she was successfully able to retain her NCB, even after the large claim. When she renewed her plan in April 2024, she got a discount of 50% on her comprehensive plan, which was very beneficial.

2. Avoid making small claims

If your car has sustained some damage and you need to get it repaired, you need to understand the financial equation. This means you have to calculate and see whether it is better to pay the bill from your pocket or make a claim. If the claim is for a small amount, and you have a large accumulated NCB, it helps to pay the bills yourself. If however, the damages are severe and the bill amount is very high, go for a claim.

3. Look to transfer the NCB

Since the NCB is a reward you earn for being a good and responsible driver, it stays with you even after you sell your vehicle. It does not get transferred to the new owner of the vehicle, along with the car. If you have maintained 3 consecutive claim-free years and now have an accumulated NCB of 35%, you can get it transferred to the new insurance plan you buy for your new car. You need to inform the policy provider and get the transfer done when you sell your car and get a new policy for your new car. It is, however, important to remember that the transfer can only happen if you buy a similar car. For example, if you had a sedan previously and now buy an SUV, you cannot transfer the NCB. You can do so only if you purchase another sedan in the same category.

As you can see, there are some rather simple ways in which you can protect your NCB. Apply these methods and see how you can save your NCB for the longest possible time.

The final word

Keep all the tips, tricks and points mentioned above in mind when you get car insurance. The ultimate aim of a no claim bonus is to keep you safe and prevent you from getting into accidents. However, the financial aspect is also quite significant and the NCB feature in comprehensive motor insurance helps you to save a lot of money when you renew your coverage. Car insurance is mandatory in India and you will need a policy for as long as you own a vehicle. Getting a substantial discount on that is highly desirable, so ensure you get all the facilities and benefits of no claim bonus in car insurance.

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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