Reduce Car Insurance Premium With No Claim Bonus

Ask any expert as to how to reduce car insurance premium, the advise is drive safely, avail NCB. No claim bonus or NCB is one of the major factors affecting car insurance premium. It is a discount that the vehicle owner gets if he doesnt make a claim the whole year. Percentage of bonus increases for every claim free year.

How is NCB Calculated

NCB can be availed for every claim free year of the vehicle. It is calculated on the own damage part of the insurance premium and not the third party insurance. Own damage (OD) premium forms a major component of comprehensive car insurance. One can get up to 50% discount on it.

For no claim during the previous year one gets 20% discount on OD, For no claim during two previous years discount is 25%, For no claim in three preceding years discount is 35%, for no claim during four previous years, discount is 35% and for four or more preceding claim free years, the discount is 50%.
Once a claim is made, the NCB becomes nil. The next premium is higher and the whole process of accumulating NCB will begin from zero. Some insurance companies offer an add-on cover to protect NCB

How to Avail NCB

The insurance company automatically includes the discount in the renewal notice. If the car insurance has lapsed and you renew it within the grace period of 90 days, you can still avail the NCB. If insurance is not renewed within the grace period, NCB lapses. There are certain things to take care if you are selling the car or changing the insurance company.

If you are changing the insurance company, make sure that you take the no-claim bonus certificate. Once you present it to the new insurance company, it will be implemented. It is important to take this proof as without this the discount cannot be availed.

No-claim bonus is offered to the person and cannot be transferred to the new owner if you are selling the car. Make sure that you get the no-claim bonus certificate from the insurance company before transferring the insurance. You can avail this benefit on your new car if you buy it within 3 years of selling the old car. The discount slab will remain the same as it was at the time of selling the old car.

Make the most of being a safe driver and avail the Bonus. It is the single most effective way of reducing car insurance premium.

Liability Only Or Comprehensive, Which Auto Insurance To Choose

Vehicle insurance is mandatory in India. It is illegal to drive without auto insurance. The choice of taking liability only coverage or the comprehensive coverage lies with the customer. It is important to know what they mean and what they include so as to make the choice.

Liability Cover

Liability cover is the mandatory aspect of motor insurance. As per the law, it is the minimum insurance one need to have to be able to take the vehicle on road in India. This covers the third party (While the first party is insured, second the insurer) for:

1.Third party liability for bodily injury,
2.Third party death
3.Third party property damage

If in case of an accident one is liable to pay the third person for injury death or property damage, insurance company takes care of it. Liability only policy also covers the owner driver of the vehicle for injury and death.

One can also combine this basic cover with Fire and theft cover:

1.Liability only policy with Fire only cover
2. Liability only policy with theft only cover
3.Liability only policy with fire and theft cover

This type of insurance is the bare minimum one needs to have but is ideal only if the cost of the vehicle has reduces substantially due to accident or years of use.

Comprehensive Cover

Comprehensive package policy covers the own damage part of the vehicle along with the mandatory aspects of the liability only policy. Comprehensive car insurance will cover:

1.Third part liability for bodily injury, death and property damage
2.Fire, explosion, self ignition, or lightning
3.Natural disasters like floods, hurricanes and storms, earthquakes, Landslide etc.
4.Burglary, housebreaking or theft
5.Riot, strike, or terrorist activity.
6.Accidents
7.Malicious act
8.In- transit by road, rail, inland-waterway, lift, elevator or air

Comprehensive cover includes personal accidental benefit for the owner of the car. Accessories installed later in the vehicle can also be covered under the policy on payment of extra premium. Insurance companies come up with attractive add on covers to compliment the basic comprehensive cover like:

1.Depreciation cover
2.NCB protection cover
3.Personal belongings cover
4.Daily allowance cover
5.Loss of keys
6.Road assistance cover

The purpose of taking comprehensive car insurance is to offset the cost of repair incurred on ones own vehicle in case of an accident. Taking comprehensive car insurance makes even more sense if the vehicle is new, expensive, has been accessorised. In such cases, damage repairs cost a lot. If one has this cover all one has to pay is the deductible and the rest is covered by the insurance company up to the sum assured. Besides Comprehensive insurance offers facilities like cashless claim settlement and eases out the process.

Liability cover while cheap will cover for the damages to other person or property and not to your own vehicle. Comprehensive car insurance may appear expensive on face of it but can protect you from major financial difficulty if claim situation arises.

Car Insurance Terms Explained No Claims Bonus

A no-claims bonus (NCB) is a discount on an auto insurance premium that is earned by not making any claims on your insurance policy. The amount of discount varies for different insurance companies. A NCB of five years can potentially be worth a 60 – 70 % discount on car insurance premiums. For every year that a driver has auto insurance and does not make a claim, they earn a year on their NCB. The maximum is usually five years though some companies continue to offer discounts for six to eight years. When shopping for new car insurance, it is essential to find out more about the no-claims bonus.

It is very important to understand that the no-claims bonus is not a no blame or a no-fault bonus. The NCB will be denied irrespective of who was to blame. Even if your car gets stolen, the no-claims bonus is lost. Any claim you make will cause you to lose the NCB. Some insurers offer NCB protection; for a small additional fee you can protect and keep your no-claims bonus even if make a claim during the year. This NCB protection is relatively new and is treated differently by different insurers. The protection may keep your NCB intact or it may move it back two or three years. The special coverage may be good for only one claim and the costs will vary depending on your policy and insurance carrier. If you are looking to change insurance companies and are shopping for new car insurance, your no-claims bonus can usually be transferred to your new company.

The NCB is only one of the factors that determine your insurance cost when calculating your premium price. Most insurance carriers have a list of questions they ask when applying for new car insurance. These questions are used as part of a complex calculation to determine your final insurance cost. The discount for the NCB is not applied at the end of this calculation; it is applied somewhere in the middle. Dont expect your premium cost to be reduced by 60- 70 % as the reduction will take place somewhere during the underwriting process. However, though you will not see your insurance premiums cut by more than half, the no-claims bonus provides you with substantial savings and should be considered when shopping for auto insurance.

The NCB is important to lowering your insurance costs. Protect by driving safely, securing your vehicle, maintaining your car, and following the rules of the road. Having earned the NCB will make shopping for new car insurance a more rewarding and less costly experience.