Ask any expert as to how to reduce car insurance premium, the advise is drive safely, avail NCB. No Claim Bonus or NCB is one of the major factors affecting car insurance premium. It is a discount that the vehicle owner gets if he does not make a claim the whole year. Percentage of bonus increases for every claim free year.
How is NCB Calculated
NCB can be availed for every claim free year of the vehicle. It is calculated on own damage part of the insurance Premium and not the third party insurance. Own damage (OD) premium forms major component of comprehensive car insurance. One can get up to 50% discount on it.
For no claim during the previous year one gets 20% discount on OD, For no claim during two previous years discount is 25%, For no claim in three preceding years discount is 35%, for no claim during four previous years, discount is 45% and for four or more preceding claim free years, the discount is 50%.
Once a claim is made, the NCB becomes nil. The next premium is higher and the whole process of accumulating NCB will begin from zero. Some insurance companies offer an add-on cover to protect NCB
How to Avail NCB
The insurance company automatically includes the discount in the renewal notice. If the car insurance has lapsed and you renew it within the Grace Period of 90 days, you can still avail the NCB. If insurance is not renewed within the grace period, NCB lapses. NCB can be protected while changing the insurance company or at the time of selling the vehicle.
If you are changing the insurance company, make sure that you take no-claim bonus certificate. Once you present it to the new insurance company, it will be implemented. The NCB discount cannot be availed without this proof.
No-claim bonus is offered to the person and cannot be transferred to the new owner if you are selling the car. Make sure that you get the no-claim bonus certificate from the insurance company before transferring the insurance. You can avail this benefit on your new car if you buy it within 3 years of selling the old car. The discount slab will remain the same as it was at the time of selling the old car.
Make the most of being a safe driver and avail the bonus. It is the single most effective way of reducing car insurance premium.