What is No Claim Bonus in Car Insurance Policy?
Where a number of people tend to be extra careful with their automobile, others are just lucky to have not encountered any unfortunate mishap which requires them to claim their policy. In such cases where the policyholder does not claim a certain policy or insurance benefits during the term of the policy, he/she is gifted with additional discounts in the form of NCB or "No Claim Bonus". The NCB thus offered, is known to keep on adding throughout the period of the policy. It highly depends on the term of the car insurance premium which determines the percentage of discount offered. Thus, a policyholder who has not claimed any benefit in a period of two years shall be blessed with a discount of 20%. The discount rates often vary from 25% levied at the end of the three years, 35% after four years, 45% post the fifth year and 50% at the end of the sixth year. The discounts are usually offered in case the vehicle needs any damage repair. In case the policy expires, the no claim bonus is directly shifted or handed over to the renewed policy directly.
No Claim Bonus for Private and Commercial Cars
Where NCB insurance can be readily availed for personal cars, the probability of availing it for commercial purposes is not that easy. The format and the rules of claiming a car insurance no claim bonus also depends on the ensuring company as well as the driving experience of the policyholder. In simpler words, one may not be able to claim an NCB insurance from any and every insurer. He/she may also be unable to claim it if the individual has zero driving experience or is a beginner. While availing an NCB insurance, the experience is primarily considered. Hence, the policyholders are highly advised to gain commercial driving experience (even if it is for an organization) before availing a premium or car insurance policy.
When Can No Claim Bonus Become Invalid?
No claim bonus has high chances of being declared as invalid in several cases, such as:
- If the policyholder claims the car insurance premium for own damage repair, the no claim bonus shall be immediately terminated.
- The policyholder is changed while buying a new policy or a fresh policy for a new vehicle.
- The person does not request or agree to transfer the existing no claim bonus to a renewed policy or a fresh policy availed for a new vehicle. In such a case, the NCB in motor insurance shall be declared invalid.
- In case the car insurance premium is not renewed within the renewal period of the policy (which is generally ninety days from expiration).
Third Party Policy
NCB in motor insurance can highly get affected in several cases. The involvement of a third party is considered very important while claiming coverage in NCB insurance during accidents and theft. In both cases, if the insuring company is unable to recover a lump sum from the third party involved in case of an accident, the no claim bonus is said to be lost. Hence, NCB car insurance can hardly be claimed in case the vehicle is stolen or robbed as there is no chance of recovery in these cases.
NCB maintenance is often suggested by the insuring company as an additional benefit which can be very helpful in the long run. It requires the policyholder to pay a certain amount of additional money in return of the guarantee, that the no claim bonus shall be kept safe. This is because the NCB insurance can be declared invalid if the policyholder claims a very little sum for damage repair. Hence, in such cases, if the individual claims for NCB maintenance cover, the NCB shall remain untouched.
NCB insurance is considered as a gift to the policyholder from the insurer as this marks the responsibility of the individual as well as his/her perseverance. Besides, the insurer is highly benefited in such cases. However, one has to take care of the terms and conditions which might lead to cancellation of the no claim bonus, to make sure the years of hard work and perseverance does not go in vain. The additional benefit of an NCB car insurance is that it is transferrable. Even if the insuring company changes its name or hands over the business to a different company, the policyholder will still be able to claim the insurance if the terms are not violated.