What is an NCB Protector?
The no claim bonus is a type of insurance policy that covers the policyholder for any personal injury or property damage that is not a result of an accident. It also covers any legal liability. No claim bonus protects the policyholder from having to pay for any claims or lawsuits. This is done by providing a fixed amount of money in the event that there are no claims made against them.
This insurance policy is usually offered as part of car rental packages, travel policies, and home insurance policies. No-claim-bonus for mediclaim or car insurance is given as an incentive for not making a claim. Car insurance NCB can be transferred to the new insurer. Resist the temptation to save on premiums by faking the NCB while moving to a new insurer, or else you will face problems when a genuine claim is filed.
In a car insurance policy, if you make a claim your no-claim bonus becomes Zero. For example, you have 25% NCB in your car insurance policy this year and due to an unforeseen situation, you had to go for a claim. At the time of renewal, your NCB would be 0% as there was a claim in the previous year's car insurance policy.
This means you can only claim NCB if there is no claim in the previous year. So the concept of No claim bonus protection has been introduced by the insurance companies in the Indian insurance market to help customers have their NCB intact.
The No Claim Bonus protector helps the customer to protect the NCB in case of up to 2 claims during the policy period. For instance, if you purchase the NCB protector add-on you can claim up to 2 claims in a policy period without losing your NCB. The NCB in your policy is protected by the NCB protector even though there are up to 2 claims in the previous policy year.
Insurance companies offer no claim bonus policies to incentivize drivers to purchase car insurance. If a driver has not been involved in any accidents or filed any claims while driving the policy, they can get a discount on their premium.
Here are the consequences of declaring the wrong NCB in your Car Insurance.
No claim bonus is the discount provided on the own damage section of the car insurance for not claiming on your car insurance during the policy period. No claim bonus can range from 0% to 50% and increases with each claim free year. If a claim is made in any year the No claim bonus comes down to 0% and goes up to 50% if there is no claim in a span of 5 years.
The no claim bonus is offered to the customer depending on his/her driving habits to discourage the customers from making small claims. Since the NCB belongs to the policyholder it can be transferred to the new car in case the old car is sold to someone else. Most of the companies offer extra discounts to the vehicles which have NCB mentioned in the policy copy. For vehicles with NIL NCB the company discount might be quite less and this makes some people go for the wrong declaration of NCB at the time of taking the policy.
There may be cases where the NCB had been mentioned wrongly in the policy copy. It might have been intentional or by mistake, but the consequences would be the same in both cases. Let us understand the consequences of a wrong NCB declaration in a car insurance policy:-
1. Before Claim
When the NCB is declared wrongly in the proposal form at the time of renewal, insurance companies will issue the policy based on the customer declaration. After the policy is issued insurance companies cross-check the data with the previous insurance company and verify the authenticity of the No claim bonus. If the NO claim bonus is found to be more than that of the eligibility, you will receive a letter from the insurance company asking you to pay the difference amount immediately to enable the insurance company to pass an endorsement.
Now the policyholder has an option to either pay the difference amount or ignore the mail. If the difference amount is paid to the insurance company, an endorsement will be passed with the updated NCB in the policy copy. It is the responsibility of the customer to read the proposal form carefully and understand it before signing it. If you are taking a policy from an agent, then it is your duty to ask for each and every detail and ensure that there are no mistakes in the proposal form.
2. At the time of Claim
Customers who ignore the No claim bonus emails from the insurance company will suffer at the time of claim. At the time of claim, the intimation insurance company will verify all the policy details and also the accident details before proceeding. If found that the No claim bonus submitted at the time of policy issuance is wrong and despite continuous reminders the customer has not paid the difference NCB amount, there are two cases of how companies handle a claim:
- Reject the claim completely and ask the customer to pay the difference NCB amount so as to claim in the future
- Deduct the difference NCB amount from the total claim and settle the remaining claim amount to the customer.
In most cases, the insurance companies reject the claims that have fraud NCB, this is done to penalize the customer who has claimed the NCB fraudulently.
For the best online car insurance quotes visit www.policybachat.com and get affordable online car insurance quotes from the top general insurance companies. For any NCB corrections please contact our toll-free number or send us a mail at firstname.lastname@example.org.
Benefits of NCB Protection Cover:
- Discounted Premiums: With every claim-free year, the accumulated NCB will fetch a discount on the next policy renewal. Depending on the time period, this discount can be anywhere between 20 and 50%.
- Higher Savings: The NCB percentage will increase by following all the rules. Those who don't raise any claims for five consecutive years can get a sizable discount on their premiums each time their policy is renewed.
- Portability: Many people aren't aware of this one; NCB is accrued to the car owner, not the car. Hence the bonus earned so far by being a responsible driver can be carried forward if the insured buys a new car after selling the old car.
- Claims: The NCB protector protects your No claim bonus for a maximum of 2 claims made in the previous policy period. The Own damage claims made for Partial Loss include Windshield damage, Total Loss, and theft of your car or any other accessories in the car. The insured customer will be eligible to carry the NCB for the next year at the time of renewal with the NCB protector in the car insurance policy copy.
Exclusions of NCB Protection Cover:
- Exceeding the number of claims allowed under the NCB Protector add-on will make the insured ineligible for the no claim bonus.
- The policy must be renewed within 90 days of the expiry or as stipulated, else the NCB will drop to 0%.
- Mid-term inclusion or removal of the NCB protector is not allowed by most insurers
- The vehicle must be repaired in a network/ authorized garage.
- The NCB will be canceled in case any fraudulent OD claims have been made or any misrepresentation of facts regarding a claim has been made.
- This add-on will not be valid if the vehicle is transferred from one customer to the other. The new customer who had purchased your car will not be eligible for the NCB protection cover as the NCB is given to the driver/owner of the car and is not transferrable to the new driver/owner of the car upon resale of the car.
Important things About Car Insurance NCB:
NCB is essentially a discount on your insurance premium that you can avail of when you renew your policy. If you do not make any claims for a few years consecutively, you can accumulate up to a 50% discount on premiums! Now isn’t that amazing? Here are some other important things you must know about NCB.
- Is NCB a discount available on the renewal of the policy?
In motor insurance, the No Claim Bonus, as the name suggests, is the insurer’s reward to the policyholder for not making a claim in the preceding years. That is, NCB which is a discount ranging from 20-50% on the premium payable cannot be claimed as a right but has to be earned by maintaining a claim-free record. When you buy your first comprehensive
- Incorrect NCB:
Even if you have no malicious intentions and mindlessly write any number for NCB when switching your insurance policies, the consequences could be grave. In case of an incorrect declaration of your NCB, your insurance provider could reject your car insurance claim altogether. That means that if you declare the wrong NCB while getting insurance, it's as good as having no cover. If you are switching your car insurance policy, make sure you declare if you have made a claim with your previous insurer in that year. This data is easily sourced by insurance companies and while you may get the policy, you will face a problem when it's time to make a claim, so there's no point hiding it.
- NCB can reduce your OD premium by up to 50%:
The maximum NCB discount offered by insurance providers stands at 50%, which you earn by the end of five years of making no claims. If you’ve already earned the 50% discount, you will not be applicable to earn further discounts even if you cross another no-claim year but it continues to stay so. Here’s how your NCB progresses
- You don’t lose your NCB when you buy a new car:
What’s interesting to note is that NCB belongs to the owner of the car, and not to the car itself. So, if you’ve earned NCB discounts on your existing car, and you decide to buy another car, you can transfer the benefits to the new car.
However, note that NCB is not transferred to one person from another unless the owner of the car passes away and the car is passed on to the heir.
- NCB is not calculated on your entire insurance premium amount:
NCB discount isn’t applicable for third-party car insurance premiums, which is the basic cover that is mandatory by law. Usually, third-party liability insurance premium accounts for up to 20% of the total premium amount. So, the earned NCB percentage will be calculated on the total premium minus the third-party liability premium. Understanding this is important, as car owners often wonder if there’s a calculation error as they usually calculate the NCB on the total premium and feel they have received an insufficient discount.
Need for NCB Protector
No claim bonus ranges from 0% to 50% for each claim free year and is in the slabs of 0%, 20%, 25%, 35%, 45% and 50%. This means that the customer of the car can avail of up to a 50% discount on their own damage premium if the NCB is carried forward from the previous policy year. The NCB is carried forward from the previous policy year only if there is no claim in the previous policy year. In case of a claim, the customer loses his NCB and has to start from 0% NCB.
Since the NCB can go up to 50% for each claim free year, this makes a huge difference in the premium to be paid by the customer. There might be instances where the customer had 50% NCB in his policy copy but had to make a claim due to certain unavoidable situations. In this case, he’ll lose his NCB completely and have to pay a heavy premium next year at the time of renewal as there is no NCB discount under the car insurance policy copy. Hence there arises the need to have an NCB protector be taken with the car insurance policy.
For the best car insurance quotes with NCB protector add-on cover visit www.policybachat.com and get the best affordable car insurance quotes from the top car insurance companies in India.