Use NCB Of An Old Car To Reduce The Policy Premium Of A New Car
Use NCB Of An Old Car To Reduce The Policy Premium Of A New Car
Published on November 16, 2021. EST READ TIME: 3 minutes
Car insurance is an expense dreaded by vehicle owners. Why? Because it is compulsory and recurring and not having insurance can land them in a lot of trouble. Also, if there is no need to raise a claim, it may feel like car owner-drivers are saddled with an unnecessary expense. Moreover, there are so many confusing nuances and aspects of getting car insurance -- making it very overwhelming to buy. However, for the informed and educated policyholder, new car insurance can be an opportunity to save money and make the most out of their insurance plan.
One concept in car insurance that often confounds car owners is the no-claim bonus. It is an interesting and extremely effective tool employed by insurers to keep the raising of claims to a minimum, while also allowing policyholders to save money. Here’s how it works -
A no-claim bonus is a reward given by the insurance company to policyholders who have not raised any claims in a given policy year. It works as a discount on the policy premium for the year succeeding the policy year in which no claims were raised. For example, if you buy a car insurance policy today and do not raise any claims until next year, you will get a 20% discount on the premium of your insurance when you renew it for the subsequent year. This discount keeps getting bigger with each passing year that you do not raise any claim. If you don’t raise any claims for five consecutive years, you would be eligible to get a no-claim bonus of up to 50%.
But that’s not even the best part. No-claim bonuses are not attached to your vehicle, but to you. This means that even if you decide to switch cars, the change in ownership of your car insurance plan does not mean you will have to do away with the no-claim bonus earned over the years. In fact, there are ways in which you can use your no-claim bonus to get a reduced premium price for your new car insurance as well.
Transfer NCB from old car to new car
One way to get a reduced policy premium on your new car insurance is to sell your old car and transfer the old insurance to the new owner. You can choose to retain your no-claim bonus for which a certificate will be issued. You can present this certificate when buying a new car insurance policy for your new vehicle to avail of a discount on the premium.
If you do not want to get rid of your old car and yet wish to enjoy the benefits of a no-claim bonus on your new car insurance, you can simply transfer the ownership of your old vehicle to a family member. Now, you can use your no-claim bonus to get discounts on the insurance premium for your new car. However, it is crucial to remember that you cannot use the old car’s no-claim bonus for your new insurance as long as you still own the old vehicle.
Things to remember
Car insurance policies, like all insurance plans, tend to come with a number of riders, terms and conditions. Therefore, it is important to consider all these factors before planning your car insurance. Here’s a list of some of the things you can keep in mind while transferring the old policy no-claim bonuses to the new car insurance.
● The no-claim bonus is applicable only on the “own damages” portion of the premium amount, and not on the entire amount.
● The new owner of a vehicle sold will not get the no-claim bonus entitled to the old insurance holder. If you are buying a second-hand car, you cannot expect to get the benefits of the no-claim bonus earned by its previous owner if you are also getting their insurance transferred. You can simply choose to buy new car insurance in that case.
● If you want to get rid of your old car and transfer the no-claim bonus benefits to your new one, remember that there’s a time limit for such a transfer. You can only retain your no-claim bonus for 3 years from the time that such a certificate is issued.
● You cannot transfer the no-claim bonuses earned on the insurance of one class of vehicles to another class. For instance, if you have no-claim bonuses on your bike insurance, you cannot carry them forward to your new car insurance.
Conclusion
All in all, if you are a cautious driver, you can actually pay less and less for your car insurance with each passing year. This is a blessing when prices of most things tend to keep rising. While no-claim bonuses make it possible for you to manage your insurance expenditure, they would be of no use if you are buying a new vehicle and have to pay the same premium amount. So, carefully plan your car insurance to get the best possible deal!
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.
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