What is a No Claim Bonus under Car Insurance?

If you own a car, you are one of the lucky families in India. You can roam with your loved ones wherever you desire without compromising on your needs. It takes lots of planning and investment to buy a suitable car. You assess your requirements and ensure your family is comfortable during the road trip.

Car Insurance offers protection against legal and financial hassles in the personal, vehicle, and third-party damages. Inform your provider of the mishap to claim the reimbursement. The company bears the burden of financial responsibilities that arise due to the accident. You also become eligible for a No Claim Bonus for not making claims every year.

What is a No Claim Bonus?

With Car Insurance online, the process becomes easier and hassle-free. Providers offer a reward or incentive to drivers for following traffic regulations and driving safely. This reward is essentially a bonus provided every year you do not claim on your policy. You get the benefit during renewal. Pay the amount after deducting the discount from the total premium payable.

The calculation

If you have valid Four-Wheeler Insurance and have not made any claims in a given financial year, your company discounts the premium during renewal. The reward scheme begins in the second year of buying the policy and the first renewal.

For example, you own a Toyota Etios and pay an annual insurance premium of Rs. 20,000 without making any claims in the first year. Here, you get a 10% discount on your premium, which means you pay only Rs. 16,000 if you renew the policy before it lapses.

As time passes, your online Car Insurance premium reduces further until the sixth policy renewal, where you pay only 50% of the premium amount for not making claims. According to the current regulations in India, the discount begins at 10% and increases up to 50% in five years.

How does it work?

A Car Policy gives you a 10% discount on the premium value after completing the first claim-free year. You earn a 20% discount in the second claim-free year, 30% discount in the third year, 40% discount in the fourth year, and 50% discount in the fifth year.

Things to remember

Before buying a Car Insurance Policy, read the inclusions, exclusions, coverage, benefits, and renewal processes before finalising the plan. NCB applies to you and not your vehicle. If you sell your old car and buy a new one, transfer the benefits. Either opt for the same provider or select a new one. The process is easy where you need to provide proof of no claims made in a financial year.

Remember, renew your insurance to avoid paying hefty penalties and other financial problems. You claim the NCB discount only upon 4-Wheeler Insurance renewal. You cannot claim it when you buy the policy for the first time. Similarly, it applies only to the own damage part of the premium. You cannot avail them of third-party schemes.

Conclusion

You get benefits if you buy Car Insurance online. You can access the document easily anytime and download it from your registered email address. You also receive reminders for renewal and set the auto-debit feature from your Bank Account for paying the premium online.

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