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Decoding the No Claim Bonus of Motor Vehicle Insurance

One of the common misconceptions that people have about motor insurance is that only bad and reckless drivers need insurance. But what people don’t realise is that insurance policies provide for more than that, even to the extent of rewarding you for being a good driver. Yes, you heard that right. If you do not make any claims during the course of your insurance period, your insurance provider is obligated to reward you with a bonus called the No Claim Bonus.

What is a No Claim Bonus?

A No Claim Bonus is basically a discount on your insurance premium that you get on your next renewal when you make no claims during your existing policy period. This bonus is a reward and acknowledgment for your good driving skills that also saves you quite a lot of money on your next policy premiums. You can go as far as up to saving 50% on your insurance premiums by not making any claims for a few consecutive years. The reward is totally worth getting your vehicles insured, don’t you think so?

What happens to my No Claim Bonus when:

You Buy a New Vehicle: With vehicles being an asset with depreciating value over time, it is natural for you to exchange or get a new vehicle to suit your existing needs. But, will your no claim bonus be in effect with the vehicle being changed? Of course! Unlike your motor insurance that changes with your vehicle, a no claim bonus actually belongs to the owner and not the vehicle. So, the claim benefits actually get transferred to your new vehicle and you can claim your bonus whenever you deem it fit, regardless of how many vehicles you change.

If I want to transfer it to another person: Similar to an insurance policy, a no claim bonus also cannot be transferred to another person. However, there are certain cases where the no claim bonus can be transferred i.e., when the owner of the bonus passes away and the vehicle is passed on to his or her heir. In this case, the heir can avail of the benefits of the no-claim insurance that has accumulated by their parents.

It has passed a certain period of time:  Your no claim bonus can only be accumulated until it hits the sunset clause i.e., only till you get the maximum of 50% discount on your premium. Beyond that even if you do not make claims for the insurance, the bonus remains the same. So, it is advisable to claim it once it hits the maximum 50% slot, so as to not lose due to any reasons. There have been instances where people with a 50% discount losing out on their no claim bonus due to various reasons like not renewing their insurance policy within the expiry date or having to make a claim before they can claim their bonus.

Points to remember when it comes to NCB: 

With all of this being said, there are certain factors that need to be kept in mind when it comes to no claim bonus. It is very important for policyholders to remember your No Claim Bonus number during your renewal or claims, for such mistakes though accidental could have grave consequences like your insurance provider rejecting your insurance claim altogether making you lose out on your bonus too. Even if you were to declare a wrong no claim bonus and it does not get noticed during renewal, it can be easily deduced while you have to make a claim. So, it is vital to remember your NCB number while declaring your information for the renewal.

Being a good driver is not just about being concerned about your own safety, but that of others as well. A no claim bonus is an amazing reward that you get from your insurance provider for having such a self-regulated approach to being a good, responsible motorist. So make it worthwhile and claim it while you have it.

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