When you buy any new two-wheeler or car insurance policy you don’t get any no claim bonus. After the first claim-free year you get a bonus at the time of renewal of the policy and that is called No Claim Bonus (NCB).
For the first claim-free year you get a 20% bonus. On completing two consecutive claim-free years you get the 25% NO Claim Bonus.
You can accumulate the no claim bonus maximum up to 50% in your policy. But when you get a claim during the policy term your accumulated no claim bonus becomes zero. However, You can protect it by opting for no claim bonus protection cover.
What is No Claim Bonus Protection Cover?
No claim bonus protection cover is an add on which is design to protect your no claim bonus even you have claimed in a policy year.
For example, if you have not claim till three consecutive years then you have 35% of NCB. In case you get a claim in the fourth year then your bonus should become zero.
But if you have no claim bonus protection cover in your policy then the NCB will not be zero.
Let’s better understand with this example
|Mr. Vikas||Mr. Shailendra|
|Purchase a comprehensive insurance policy for his car.||Purchase comprehensive insurance policy with No Claim Bonus Protection Add on.|
|Accumulated 35% of no claim bonus because he didn’t file any claim in three consecutive years.||He also accumulated 35% of no claim bonus|
|In the fourth year he took a claim.||Mr. Shailendra also got a claim in his fourth policy year.|
|in this case, no claim bonus become zero||However, here no claim bonus didn’t get zero because he has no claim bonus protection cover.|
|He didn’t get any no claim bonus discount at the time of policy renewal.||He gets no claim bonus discount of 45% at the time of renewal.|
Mr. Shailendra is not losing his no claim bonus at the time of renewal because he has no claim bonus protection cover.
Benefits of No Claim Bonus Protection
Basically, it protects your no claim bonus in your motor insurance policy. Normally this add on helps you to retain your bonus even after two claims in the policy term.
Different companies have different guidelines regarding this add on. Better you read your policy terms and conditions.
It is a very useful add on the cover and you should opt for this. NCB protection cover is not available in short term motor insurance policy.
Who Should Buy?
Ideally anyone can take no claim bonus protection cover. There may be a situation where you cannot control damage in your vehicle. Raising claim will vanish your no claim bonus.
In this case no claim bonus protection cover may be beneficial. Below are the preferable situations where you can select this add on cover in your motor insurance policy:
- Someone who don’t want to lose accumulated no claim bonus.
- Someone who don’t drive safely.
- New and Luxury cars
Please remember that you renew the policy on time. To avail the no claim bonus benefits you need to renew your policy maximum within 90 days of the expiry date of the policy.
Premium For No Claim Bonus Protection
Premium for no claim bonus protection cover varies from company to company. Normally it may cost you 5 to 10% of your basic premium.
You can also do a calculative working before you opt for this add on cover in the policy. If you think saving your NCB is a better option then you should purchase this add on cover.
Can You Transfer NCB?
Yes, you can transfer the no claim bonus of the existing car to a new car also. If you are selling your existing car then you can retain the no claim bonus and use this bonus when you purchase a new car.
You can easily get no claim bonus reserving letter from your insurer. It is not mandatory to use the reserving letter immediately. You have certain validity of this letter and you can use this later also.
Buying No Claim Bonus Protection Cover is Good Decision or Not?
Buying no claim protection is normally a good decision. It has good benefits of protecting your no claim bonus even you have a claim in the policy.
Premium of this add on is also not too much. However, you need to pre-workout when you want to purchase this cover.