Q: What is a No Claim Bonus (NCB) on a car insurance policy? – Soumadeep
Car insurance providers offer a No Claim Bonus to insurers if they don’t make a single claim during the entire policy year. The NCB offered is in the form of a discount on insurance premium upon policy renewal. The NCB discount on a car insurance premium ranges around 20% to 50% applicable on the own damage component only.
Let’s suppose that the renewal insurance premium on your car is Rs. 20,000, but you didn’t make any claim during the last policy year. So, you will be entitled to an NCB at 20% during the first renewal, i.e. Rs. 4,000 off on Rs. 20,000. Hence, you need to pay only Rs. 16,000 while renewing your car insurance policy.
The best part about a car insurance NCB is that you can retain the accumulated NCB benefit even when you are selling the car. That retained NCB benefit can be applied to the car insurance premium that you would need to pay when buying a new car.
Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil.