A non-claim bonus (NCB) refers to a reduction in your premium costs if you do not register any claims during the policy term. If you have been a decent driver and have always been able to avoid claims and accidents, you will receive an NCB in your car insurance. In fact, insurance providers offer rewards to individuals with excellent driving records.
How Does NCB in Car Insurance work?
- 1 How Does NCB in Car Insurance work?
- 2 NCB Protection
- 3 Benefits of an NCB
- 4 Things to Consider with an NCB
As prices continue to rise, car insurance helps by offering annual discounts on premiums, thanks to the NCB. On the same subject : 58% of drivers think they are overpaying for car insurance, 29% have recently changed companies. It accumulates every claim-free period, allowing you to get a substantial discount of 20% to 50%, provided you do not submit claims for consecutive years.
An NCB basically works through a tiered system. This means that the bonus increases the longer a driver is able to drive claims. As a result, the amount of premiums you have to pay is significantly reduced.
You start off with a 20% discount if you don’t raise a claim during your first policy year. After this process, you will receive a constant 5% additional increase in the discount in your second year of no claims. For the fifth year, you will find yourself enjoying a 50% discount as long as you are claim-free. In a nutshell, good drivers are more likely to optimize discounts and car protection in the long run.
As claims generally cost insurance carriers money and time, an NCB is also a great way to reward drivers who manage to maintain a clean driving record. However, it can be terminated if there is a failure to renew the policy within a time frame of 90 days from its existing expiry date and if a claim has been raised during a policy year.
An NCB protector cover may also be required to ensure that the bonus is not reset for an important claim.
You can protect your NCB by paying an additional premium. In this way, the policyholder can protect his NCB even if there is a need for a claim. See the article : What insurance covers items stolen from car?. Having an NCB Protector allows you to reap the benefits of an NCB instead of losing it entirely.
The cost is not the discount that you can access after a five-year claim-free period, despite how there may be certain points about how you often use the insurance. Furthermore, having two or more claims can still cause a significant impact. To pay for NCB protection, however, the policy cost will not increase over the years.
When are NCB protectors not necessary?
With insurance policies, reading the fine print is imperative to determine certain clauses that are not covered. Read also : Drivers Are More Open To The Use Of Credit, Education In Car Insurance Quotes. There are some cases that you need to keep in mind where an NCB Protector is not applicable.
It is important to remember that the extent of benefits or coverage varies greatly from one insurer to another. That said, you need to weigh different policies before deciding on your insurance right away. For good measure, you can thoroughly compare different policies so that you can secure the best deals and protection.
Benefits of an NCB
Car owners can enjoy various benefits with an NCB in their car insurance policy. Here are some of them:
The percentage of your NCB increases gradually as long as you follow the established rules. Drivers who are unable to raise claims for five consecutive years will most likely receive larger premium discounts for each policy renewal.
As already mentioned, an NCB basically acts as a reward for responsible drivers for how they are able to maintain the good condition of their insured car. In this case, the policyholder earns rewards through NCB by not submitting any claims during the previous policy term.
With an NCB you will get about 20% to 50% on your car insurance premium. The percentage of the discount is awarded to the insurer every claim-free year, which can then help reduce the amount of premium you have to pay when it’s time to renew.
Hassle-Free Transfer to Another Insurer or Car
One of the advantages of an NCB is that it can be easily transferred to another car if the policyholder decides to change vehicles. In addition, it also lets you switch insurers if you decide to buy insurance from a new company entirely.
Offered to Policyholders, not Cars
It is worth noting that NCBs are issued to the car owner/policy holder instead of the vehicle itself. This means that when you sell an insured car or buy a new one, the NCB is still there because the car owner continuously renews the car insurance policy. Furthermore, it cannot be transferred to new vehicle owners.
Things to Consider with an NCB
1. NCB does not apply to third-party covers
NCB is a benefit that comes only with the own damage premium instead of the third party liability premium, which accounts for around 15-20% of the total premium. This means you cannot use NCB discount if you only have third party insurance or add-ons. You don’t get to earn NCB regardless of the years your policy was renewed or when there are claims.
Also, dropping an irrelevant add-on cover will not affect your accumulated NCB at the time of policy renewal. However, you can consider the NCB Protector add-on, which helps protect your benefits in case a necessary claim needs to be made.
2. An NCB discount is only available during policy renewals
When you buy your first comprehensive policy, you’re usually not eligible for a premium discount because you don’t have an existing claims-free record at that point. You can only benefit from an NCB which starts with a 20% discount on your first renewal of the policy only if there was no claim for the previous year. Eventually, this discount only grows every year without a claim where you get as high as a 50% discount on your premiums.
3. Transferring NCBs adheres to a simple procedure
To transfer your NCBs, you have to follow a simple procedure when you buy a new car or sell your old one. You will need to submit various forms in addition to a letter from the NCB transfer to your current insurer. After that, the insurer will give you an NCB certificate that has a validity of three years, which you must submit to your new insurer.
Suppose you decide to transfer to a new insurance provider when you are about to renew your policy. In that case, you only need the renewal notice or policy document of the last year, which will suffice to mention your eligibility for the NCB.
On the other hand, if you buy the policy online, there is usually no need to submit the certificate as the NCB will be forwarded depending on your declaration. However, this does not give you a pass to withdraw a previously made claim on the use of an NCB, as your new provider can verify this information with your previous insurer.
4. Making small claims can result in even bigger losses
It can be quite tempting to file a claim if your vehicle suffers minor damage every now and then. But before you do anything right away, it is wise to consider the cost-benefit analysis and think about the possible consequences. This is due to the fact that the NCB is mostly reset to zero, even in cases of small claims.
If you are involved in a minor accident, it is best to skip the claim and pay for the necessary repairs yourself instead of using your car insurance on it. This allows you to go a full year without claims, so you can get an NCB when renewal time comes. It would be a waste to drop your accumulated NCB just because of a small claim. It is also important to factor in your current circumstances so you can determine whether it is the best decision to waive or proceed with a claim.
5. NCB belongs to the insured, not the vehicle
One of the best features of a no claim bonus is that it is linked to the insured instead of the car. This means that you may keep your NCB even if you decide to replace your current vehicle with a new one or if you suddenly decide to switch to a new insurance provider.
Suppose you bought a car in 2008 that was sold on or after the fifth anniversary of your policy. If you have managed to reach the 5th year without claims, you are entitled to 50% NCB discount. Even if you buy a new car in the same year, you can easily transfer your accumulated NCB to the policy of this new car and then claim the discount on your first payment.