Here are the consequences of declaring 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 discount 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 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 the cases. Let us understand the consequences of 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 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 passed with the updated NCB in the policy copy. It is the responsibility of the customer to read the proposal form carefully and understand before signing on it. If you are taking a policy from an agent, then it is your duty to ask 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 mails from the insurance company will suffer at the time of claim. At the time of claim 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 continues reminders the customer has not paid the difference NCB amount, there are two cases 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 of the cases, the insurance companies reject the claims that have fraud NCB, this is done to penalise the customer who has claimed the NCB fraudulently.
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