People today understand the importance of the No Claim Bonus (NCB) feature in vehicle insurance. However, many people might be unaware that they can also claim NCB on a newly purchased car.
As per Indian Motor Vehicle Act, it is mandatory to own a third-party vehicle insurance coverage for driving a car on public roads. However, this only covers you against third-party damages and not damages to your own car. To cover against damages to your own car in case of an accident, you have to purchase either a stand-alone own-damage policy or a bundled comprehensive insurance that covers damages to your own car, self, as well as third-party.
Comprehensive car insurance policy premiums are higher than third-party insurance policies. However, you can avail No Claim Bonus (NCB) discount on your previously sold car to reduce the premiums considerably.
No Claim Bonus in Car Insurance
NCB is a unique feature where the insurance firm rewards the policyholder for not making an insurance claim during the policy period. In other words, NCB is the discount applicable to the own-damage component of the car insurance premium for every claim-free year.
You must note here that the NCB feature doesn’t apply to third-party vehicle insurances irrespective of the number of claims-free years maintained by the policyholder.
The NCB can be as high as a 50 per cent discount on the own-damage premium if no claim is made for five consecutive years. However, it goes to zero the moment you file an insurance claim.
Transferring NCB on Purchasing a New Car
NCB is the reward given to the policyholder and not the vehicle. Therefore, you are eligible to retain your accrued NCB after selling the old car or while switching your insurance provider during the policy renewal. Additionally, as the NCB is for the individuals and not the car, it can also be transferred to the legal heir within 90 days from the death of the insured.
Steps to Transfer NCB from Your Old Car to the New Car
– Ensure Proper Paperwork While Selling Your Old Car
Collect the proper sales invoice and the sales deed while selling your old car. Submit RTO forms 29, and 30 and keep adequate copies of the submitted form.
– Apply for NCB reserving certificate
Inform your existing insurance provider that you have sold the car and apply for transfer of NCB along with copies of the documents mentioned above. The insurer will then issue the NCB reserving certificate with a three-year validity.
– Transfer NCBTransfer your NCB by submitting the NCB reserving certificate to the insurer of your new car. Few insurers especially if it’s a public company may also require sale proof document and transferred RC copy along with the NCB reserving certificate.
Once you complete the procedure mentioned above, your NCB will be transferred to the new car insurance plan.
Remember, even small claims on your vehicle insurance can reduce your NCB to zero. Therefore, it is advisable to use your insurance claim prudently after a cost-benefit analysis. If you can hold on to your NCB for a long period, such as five years, it can significantly lower your car insurance premium on your newly purchased vehicle.
This article is authored by Ravichandran N, the Chief Technical Officer at Kotak General Insurance, and views expressed in this article are the author’s personal views.
