Car insurance is a necessary requirement for anyone who drives a car. It protects us from the financial burden of accidents and other mishaps that can happen on the road. One of the most significant benefits of car insurance is the no claim bonus (NCB). In this article, we will discuss what NCB is, how it works, and its advantages.
What is No Claim Bonus?
No Claim Bonus (NCB) is a discount given to car owners by their insurance company for not making any claims during the policy period. The discount is given as a percentage of the premium paid in the previous year and can accumulate over time if no claims are made.
How does NCB Work?
When you purchase a car insurance policy, the insurance company determines the premium based on various factors such as the make and model of the car, age of the driver, and location. If you do not make any claims during the policy period, you become eligible for an NCB discount when renewing your policy.
The percentage of NCB increases with every claim-free year, starting from 20% for the first year and going up to 50% for five consecutive claim-free years. However, if you make even a single claim, your NCB for that year gets reset to zero.
Advantages of NCB
There are several advantages of NCB that car owners should be aware of:
1. Reduced Premiums: The primary advantage of NCB is that it reduces the amount of premium payable for car insurance. The discount can range from 20% to 50%, depending on the number of claim-free years.
2. Transferable: NCB is transferable between insurance companies. If you switch your insurance provider, you can still retain the accumulated NCB.
3. Long-term Benefits: With every claim-free year, the NCB accumulates, resulting in significant savings over time. The cumulative effect of NCB can lead to a substantial reduction in premiums.
4. Encourages Safe Driving: NCB provides an incentive for car owners to drive safely and avoid accidents, which benefits both the owner and insurance company.
5. No Effect on Third-party Claims: The NCB discount only applies to own damage claims and does not affect third-party claims made against you.
How to keep no claims bonus without a car
If you do not own a car but have a no claims bonus (NCB), there are a few things you can do to keep it:
1. Keep your policy active: If you have insurance for a car but no longer own it, you can keep the policy active by switching it to a “named driver” policy. This means that you will be listed as a named driver on someone else’s policy, and you can continue to accumulate NCB as long as you do not make any claims.
2. Transfer your NCB: If you decide to purchase a car in the future, you may be able to transfer your NCB from your previous policy to your new one. However, this is something you would need to discuss with your insurance provider.
3. Protect your NCB: Some insurance policies offer NCB protection, which means that even if you make a claim, your NCB will remain intact. This usually involves paying an additional fee, but it may be worth it if you want to safeguard your NCB.
It’s important to note that NCBs usually expire after a certain amount of time, so it’s best to check with your insurance provider to see how long your NCB will remain valid if you don’t use it.
Conclusion
No Claim Bonus is an essential aspect of car insurance that rewards car owners for safe driving and avoiding accidents. By accumulating NCB over several years, car owners can reduce their insurance premium significantly. It is important to remember that making a single claim can reset the NCB to zero, so it is essential to drive safely and avoid accidents whenever possible.
