Five things to know about no-claim bonus

1) An insurance company rewards a vehicle owner for not making any claim on the policy in the previous year by offering him a no-claim bonus ( NCB).

2) The bonus acts as a discount on the ‘own damage’ premium payable by the vehicle owner at the time of renewing the policy.

3) The no-claim bonus can be accumulated over a period of time and is offered at a higher rate for consecutive years with no claims. The maximum rate is 50%.

4) Whenever the vehicle owner makes a claim, the bonus reverts to nil.

5) The bonus accrues to the vehicle owner, not the vehicle. If the owner replaces the old vehicle with a new one, he can ask the insurance company for transfer of NCB to the new vehicle.



(Content courtesy: Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)