If you have a car, you might wonder what No claim Car Insurance is and how it will work. Actually, it is a difficult concept to grasp when you don’t realise its importance. This article will tell you How Does A Claim Bonus Impact Your Car Insurance Premium? Let’s get started
Benefits Of NCB (No Claim Bonus)
There are many benefits of NCB in car insurance and we have listed some of the most important ones below:
Lower Premiums
The most obvious benefit of NCB is lower premiums. You will be able to get a much lower premium than what the market would have otherwise offered you.
This option will also help you save money on your monthly bills as well as give you more time to make other arrangements for paying them off (such as loans).
Transferable to another car/insurer
As long as the policyholder remains constant, a no-claims bonus can be transferred to another vehicle when purchasing or selling one’s car.
NCB is transferable from one insurer to another if you’re planning on renewing your policy with the same company. However, an NCB Certificate from the existing insurer must be shown before it can be transferred.
Higher savings
The more you drive without making a claim on your insurance, the higher your bonus.
If you don’t file a claim in five years and renew your car policy on time, it’s possible that the company will give you a significant discount on the next renewal.
Why Car Insurance No-Claim Bonus (Ncb) Is So Important?
A No Claim Bonus is a significant factor in car insurance since many drivers end up spending a lot of money on comprehensive coverage throughout the life of their vehicle.
The more the premium, the higher the car value. The No Claim Bonus is a significant feature for every four-wheeler owner because it helps to lower premiums.
Why Do Insurance Companies Use No-Claims Bonus When Setting Premiums?
After a year of driving safely with no accidents, you are ready to renew your car insurance policy.
Your insurance company appreciates the fact that you haven’t filed a claim and has rewarded your diligence by offering you lower premiums.
When you renew your insurance policy, the company may offer a discount for having been a loyal customer. This is known as loyalty insurance (or car/bike insurance NCB).
No Claim Bonus Add-on
No claim bonus is the reward that your car insurance company gives you when you have an accident-free period. After purchasing this add-on, you will be able to receive your No Claim Bonus discount even if you have made a claim.
This add-on pays for a fixed number of claims, regardless of the cost; this does not affect your no-claims bonus. People who drive safely and follow the rules with their car should buy a No Claim Bonus add-on cover, as it will ensure that they don’t lose any of their accumulated NCB due to an unfortunate rare accident.
No Claim Bonus Calculator
After understanding what an NCB is in insurance terms, the next big question is – how much does it cost?
There are several formulas for determining your car’s No Claim Bonus.
Many insurance companies make it easy for their policyholders to calculate the amount of No Claim Bonus they will receive by providing them with online calculators.
The company will usually start to raise your rates at the beginning of the second year of a policy.
In India, no claim bonus for four-wheeler insurance is generally calculated in the following way: 20% of the insured sum is payable at one time if there are no claims during the first year. An additional 5% will be added to NB each succeeding with every renewal period until it reaches 50%.