When it comes to protection and security, the first idea that comes to mind is insurance. However, insurance has much more to offer than just a safety net. One such example is the no-claim bonus. The no-claim bonus, known as NCB, is essentially a reward for not needing the service of the insurance provider. The idea is simple, you get a bonus if you go unclaimed every year. However, this feature is only available as an add-on.
While an NCB benefit exists in all types of insurance policies, it is most commonly associated and sought after in the case of motor insurance. Also, an NCB benefit can be an important factor in deciding which policy you should buy. This advantage allows you to keep your security and provides an extra bonus advantage.
However, to take advantage of this feature and make the most of it, you should know every aspect of it and how it affects your policy. Therefore, here is everything you need to know about No Claim Bonus in motor insurance.
NCB only for comprehensive coverage
Third party coverage and comprehensive coverage are concepts specific to car insurance. These are the coverage options you have when purchasing a policy. A third-party policy, as the name suggests, covers damages to a third party who is injured or has property damage. In this case, you must make a claim as you are obliged to compensate the third party. In addition, the coverage benefits the third party and does not cover its own loss.
Also, NCB is an add-on. You cannot purchase add-ons through the third-party policy. Therefore, only someone who has purchased a comprehensive policy can take advantage of NCB. You can upgrade your coverage at the time of renewal through your motor insurance app. This allows you to be able to avail the no claim bonus benefit.
If you have NCB, it’s pretty obvious at this point that you’ll get a bonus every year for not claiming it. However, how much do you get? This amount is determined by the insurance company. Every major provider has a fixed percentage of what they initially offer. Most insurance companies will give you a bonus of 20% of your annual premium after your first year without any claims.
This percentage increases each year you do not file a claim. However, most insurers have a 50% cap. This means your undamaged bonus percentage will increase by up to 50% and then stay the same. This growth in percentage is gradual. For example, if you do not claim after one year of purchasing the policy with the NCB add-on, you will receive a 20% bonus. If you spend another year without compensation, this rate rises to 25%. This rate continues to rise until it reaches the insurer’s upper limit. This upper limit is usually 50% of the total premium at the time of purchase for most insurance providers. The exact details of your provider’s NCB policy can be found in the no claim bonus app offered by your insurance provider.
On the other hand, if you file an insurance claim, your NCB benefit is lost. You can get a benefit only when you renew your policy and purchase the add-on again.
NCB when switching providers
A common example is that customers are overly satisfied with their policy. However, the service provided by the insurer and at the cashless garage does not match the quality of the policy. Therefore, the only option left for them is to switch insurance providers. But the thought that they may lose their NCB benefits makes them hesitant. That’s not the case at all. Even if you change insurance providers, your NCB advantage will remain intact.
For example, if you have a NCB add-on with an insurance provider’s policy, you can carry your NCB bonus percentage just as you would with the next insurer if you have any reason to switch insurance providers.