Many vehicle owners see motor insurance as a regulatory requirement, something you must do, rather than something that can actively benefit you. Even though every insurance policy carries a powerful reward for cautious, claim-free driving: the no claim bonus (NCB). It’s one of the few tangible perks of being a responsible driver, and yet, many people end up losing their NCB when buying a new car.
If you’re planning to get a brand-new vehicle, don’t leave your hard-earned NCB behind. It can save you as much as 50 percent of your insurance premium, and transferring it to your new car is easier than you think.
Reward for good driving
The NCB is a reward offered by insurers to policyholders who don’t file a single claim during the policy year. It works as an increasing discount on the own-damage component of your premium (not the third-party cover, which is mandatory and fixed). Over time, the NCB can grow significantly — starting from 20 percent after the first claim-free year and going up to 50 percent after five consecutive years without a claim. For a vehicle with a high own-damage premium, that can translate into substantial annual savings.
When you sell your old car and buy a new one, your NCB doesn’t vanish. It follows you, not the vehicle. But you need to complete a few formalities to ensure that the benefit is transferred properly to your new policy.
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The procedure
For starters, you’ll need a letter confirming the sale of your old vehicle. This is generally issued by the buyer or facilitated through the Regional Transport Office (RTO) at the time of ownership transfer. You also need to share your previous year’s policy document, which shows your claim-free status, and submit a declaration — known as an NCB declaration — confirming that no claims were made during the previous policy term. Once these are submitted to the insurer, they will issue an NCB transfer certificate.
This certificate is essential for applying the same discount on your new car’s insurance policy. The process has become easier now. You need to share both a soft and a hard copy of the certificate with your new insurer. The soft copy can be uploaded through the insurer’s website or emailed to the appropriate team. Once you have uploaded the soft copy, the policy will be issued with the updated NCB.
The NCB transfer certificate is valid for up to three years. This means that even if you take some time before buying your new car, your earned benefit doesn’t expire immediately. However, it is crucial that the new car is registered in the same name as the one mentioned on the certificate. A mismatch can invalidate the transfer request. Another key point to note is that the NCB transfer is only applicable on purchasing a brand-new car, not a used vehicle.
When your NCB is transferred, the exact same discount percentage — also known as the NCB slab — gets carried over. So, if you had 35 percent NCB on your previous car, that’s what you’ll get on your new policy. If you don’t initiate the transfer, you risk starting all over again from zero, which can lead to a much higher premium than necessary.
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Comprehensive insurance
This is also the right time to reflect on the overall structure of your motor insurance, beyond the NCB. While third-party insurance is compulsory in India, comprehensive insurance is what offers real protection. It not only covers damage due to accidents, theft, fire, or natural calamities, but also offers peace of mind in uncertain situations.
For those buying a new vehicle, it’s equally important to consider essential add-ons. A zero-depreciation cover ensures that you get the full claim amount without any deduction for wear and tear of parts. An engine protection add-on becomes crucial if you live in a flood-prone area or plan to drive through rough conditions.
A return-to-invoice cover helps recover the full invoice value of the car — including taxes and registration — in case of total loss or theft. Roadside assistance is another practical add-on that can be a lifesaver during unexpected breakdowns or emergencies.
The NCB is not just a discount. It’s a recognition of your safe driving history. When buying a new car, transferring your NCB ensures that your track record is rewarded. Yet many vehicle owners forget or delay the process, unknowingly forfeiting a benefit they have duly earned.
If you’ve sold your old car and are in the process of buying a new one, make sure your NCB comes along for the ride. It’s your reward. Don’t leave it behind.
(The author is the Business Head, Motor Insurance at Policybazaar.com)
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