A bonus in the world of insurance sounds wonderful, isn’t it? For an insurance fanatic, a no claim bonus is nothing new. However, if you are a newbie, then we are sure you would want to know more about this. Let’s begin by first understanding what exactly a no claim bonus is.
As a policyholder, you have the option to avail no claim bonus - a discount given by your insurer if you make no claims during the term of your policy. The no claim bonus can be accumulated over a period of years and depending on the number of years; the discount percentage would be determined. It can range anywhere from between 20% to 50%. The percentage of your no claim bonus keeps increasing every year.
There are a number of things related to no claim bonus that you should be aware of, and in this post, we would be discussing 5 things that you should know about no claim bonus.
One of the positive features of no claim bonus is that it is easily transferable which means that it is still valid even if you exchange your old vehicle for a new one provided it is the same kind. This is because the no claim bonus is usually in the name of the policyholder and not in the vehicle. Just ensure that the new vehicle gets registered on the same policyholder’s name.
There are two instances when the no claim bonus can get terminated. One is if you have made any claim during the policy year and the other is if you fail to renew your policy within 90 days of its expiration. Either of these instances can lead to termination of your no claim bonus.
No Claim Bonus Proof Validity
You need to keep in mind that the proof of your no claim bonus is valid only for two years. So those who don’t have a valid policy for two years would have to start the process from the beginning when he/she takes a new policy.
In a majority of cases, the exchange of no claim bonus is permitted when you shift from one insurer to another. The new insurer can check and authenticate the validity of the No Claim Bonus certificate so that they can be sure that there were no claims made with the previous insurer.
No Claims Bonus Protection
If a situation arises wherein you have to forego a small amount of your no claim bonus in the event of an accident or any other reason, you don’t have to fret too much because you can avail the add-on cover facility. This cover would provide an assurance up to a certain limit on your no claim bonus. Not all insurance agencies provide this facility, so make sure that you find out all these details before purchasing the policy.
There you have it – five things about a no claim bonus that you should know. But remember besides these there are many other factors that you must understand. You should always go through a policy thoroughly and then only purchase it.