Upgrading your car? Congratulations!
But what becomes of your No Claim Bonus and does it vanish with your old vehicle?
Not quite.
If you’ve built up years of claim-free driving, you’ll be pleased to know that your NCB is transferable. Let’s know how you can retain this valuable benefit when moving from one car to another.
What is a No Claim Bonus in Car Insurance?
A No Claim Bonus (NCB) is a reward extended by insurance providers to policyholders who do not make any claims during the tenure of their insurance policy. It is a progressive discount that reduces the premium on your policy renewal.
Here’s a typical NCB structure:
| Years Without Claim | Discount on Premium |
| 1 Year | 20% |
| 2 Years | 25% |
| 3 Years | 35% |
| 4 Years | 45% |
| 5+ Years | 50% |
The bonus acts as an incentive for safe and responsible driving, and over the years, can lead to substantial cost savings on your motor insurance premiums. Importantly, the NCB applies only to the own-damage component of your policy, not the third-party liability portion, which is mandatory under Indian law.
Can You Transfer Your NCB to a New Car?
Yes, NCB in car insurance is completely transferable when you switch to a new car. The bonus is awarded to the individual and not the vehicle. This means that as long as you remain the policyholder and continue to meet eligibility criteria, your accumulated bonus remains intact, even if the car changes.
For instance, if you have held an insurance policy on your previous vehicle and have not filed a claim for five consecutive years, you are eligible for a 50% discount on your new vehicle’s premium under the own-damage section, provided the transfer is handled appropriately.
It’s essential, however, that the name on the new policy matches the one on your previous policy, and that the new policy is initiated within a reasonable timeframe (typically 90 days) of cancelling or selling the previous policy.
How to Transfer Your NCB Step-by-Step
Transferring your No Claim Bonus to your new car is fairly straightforward. Below are the important steps to ensure a smooth transition:
- Notify your insurer about your decision to sell or replace your vehicle.
- Request an NCB retention certificate or a letter from your current car insurance provider confirming your eligibility for NCB.
- Purchase insurance for your new vehicle, mentioning your existing NCB.
- Submit the necessary documents.
- Receive an updated premium reflecting your retained bonus.
Once your documents are verified, the insurer will apply the bonus to your new policy. If you are switching insurers, make sure to collect your NCB certificate from the previous company. It is transferable across insurers as well.
Documents Required for NCB Transfer
To complete the transfer of your No Claim Bonus, you will typically be required to submit the following documents:
- Copy of the old car insurance policy
- No Claim Bonus certificate or retention letter from the previous insurer
- Copy of the sale or delivery receipt of the old vehicle
- Registration Certificate (RC) of the new vehicle
- Identity and address proof
- Duly filled proposal form for the new policy
These documents serve as evidence of your eligibility and ensure a seamless NCB transfer process. Always double-check the requirements with your insurer, as they may vary slightly across providers.
Is There a Time Limit to Transfer NCB?
Yes, there is. While the No Claim Bonus in car insurance remains valid after the sale or deregistration of a car, most insurers allow a 90-day window from the date of policy expiration to transfer the bonus.
Failing to do so within this period could lead to the lapse of your accumulated NCB. Hence, it is recommended to initiate the transfer at the time of purchasing a new vehicle or while applying for a new policy, to ensure you don’t lose out on your earned discount.
What Happens to NCB if You Sell Your Car but Delay Buying a New One?
If you sell your car and do not immediately purchase a new one, your No Claim Bonus (NCB) does not automatically expire. This is what happens:
- You can retain your NCB by requesting an NCB retention certificate from your insurance provider.
- The certificate remains valid and can be used when you buy a new car and purchase a new car insurance policy.
- The 90-day validity period applies from the date your previous policy expires. Failing to act within this window may result in the loss of your NCB.
- If you anticipate a delay in buying a new vehicle, you may request an extension or maintain active communication with your insurer to preserve the bonus.
Your No Claim Bonus is a valuable reward for your responsible driving behaviour, and thankfully, it need not be lost when you switch vehicles. With timely action and the correct documentation, you can seamlessly transfer your NCB to a new policy, ensuring that your next insurance premium remains affordable.
Speak with your insurer, retain your NCB, and continue driving forward with both confidence and savings.
