What is a No-Claim Bonus in Car Insurance?

As it simply describes, it is a bonus which you get at the time when your car insurance is up for renewal, if you haven't made any insurance claims in the last year. So it is a financial incentive for driving and moreover maintaining your car well, which resulted in you not making any sort of claims.

It is probably the only financial vertical in which a person is straightaway rewarded in cash for good performance. In the monetary world there is hardly ever a repay for better performance your only reward is basically avoiding penalties! For example, if you don't pay your credit card expenses on time, you would be charged a huge amount along with an interest as well as your credit rating would go for a toss. And what if you pay on time nothing no benefits!

So as long as your insurance company is giving you a no-claim bonus on your car insurance be sure that you put it to finest use. Here is an example of how you can benefit if things are managed properly. For Example you own a Maruti 800 car and the insurance premium for the same is Rs. 2000. You win a jackpot and buy a Merc whose insurance premium can be as high as Rs.50,000. If you have been accumulating your no-claim bonus, the insurance premium for the new car may be lowered by say 25%. So you save a good Rs. 7,500 for just driving well and moreover maintaining your car properly. In fact the NCB value can go upto 50% of the new premium value.

As you can check in the above example the no-claim incentive on the motor insurance is given to the driver and not the car. If you do not claim for one year you will get 20% off, 2 years and you get 25%, 3 years and you get 35%, 4 years and you get 45% and for 5 consecutive years you get 50% off on your car insurance premium.

And yes, the insurance regulator in India is working on making the auto insurance policies portable also. Therefore you can acquire the benefits even if you shift insurance companies.

Doesn't get better does it? So start driving safely!

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