What You Need to Know About NCB Calculation in Motor Insurance
25 Nov 2021
We all love getting discounts on products and services. A discount does feel good, almost like a well-deserved reward. Did you know that you can get a discount on your car insurance too? This discount is called the ‘no claim bonus’ or NCB. The NCB is given to you by the insurer as a percentage of reduction on your insurance premium if you do not make any claim during the insured year. It is important to understand the NCB calculation in motor insurance if you wish to save money on your premiums.
To get a better understanding of how NCB works, read on.
How is NCB applied to your insurance premium?
The no claim bonus is made available to you only after the successful completion of the insurance policy year. The discount that you get is pre-defined and gets applied to the premium that you will pay for insurance renewal after your running insurance term has expired. The insurance provider automatically adjusts your premium according to the NCB earned by you. The NCB calculation for car insurance keeps increasing – up to a maximum of 50% – after the completion of every consecutive year that passes without you making an insurance claim.
Understanding how NCB is calculated
The NCB percentage is fixed and does not waver between insurance providers present in the market today. To help you understand NCB calculation in car insurance renewal , here is an example. If you get through one year of coverage without raising any insurance claim, you get to enjoy a 20% discount on the premium you pay when you renew your insurance policy. So, if your initial premium amount is Rs.1000, after the completion of one year that passes without you raising your claim, your premium reduces by 20%. Thus, you would only need to pay Rs.800 for the renewal of your insurance policy (provided you are taking the exact same coverage and insurance rates have not changed).
What are the different slabs of NCB?
The table below shows the different slabs of NCB calculation for car insurance –