A No Claims Bonus Policy, briefly called NCB, is one which entitles the holder to a discount on the premium to be paid to the insurance company. The eligibility arises provided the holder has not made any claim on the insurance company.
Amount of discount
The quantum of discount is graded and increases with the number of years for which no claim is filed; for the second year – 20%, for the third year – 25%, for the fourth year – 35%, for the fifth year – 45% and for the sixth year – 50%. The bonus is carried forward provided the policy is renewed before the expiry of 90 days from termination of cover of the previous policy.
Important Features
- the bonus can be transferred from one vehicle to another;
- the bonus can also be transferred from one insurance company to another provided evidence of NCB, such as a renewal notice, is available from the previous insurance company;
- there should not be any change of the policyholder because the entitlement is to the policyholder;
- the No Claims Bonus is calculated only on the ‘own damage’ component of the insurance premium and not on the ‘third party damage’ segment
Prospective Savings
Before making an insurance claim, it would be worthwhile to make a cost-benefit analysis to determine whether or not it would be prudent to forgo the claim, if the amount of bonus that would have to be forfeited is substantial.
