How to transfer the No-Claim Bonus of your motor insurance policy to a new car?

When purchasing a new car, it is important to understand how your existing motor insurance benefits can continue to serve you. One of the most valuable features in car insurance is the No Claim Bonus (NCB). NCB is a reward provided by the insurer to policyholders who have not filed any claims during the policy term. It is essentially a discount on the premium, offered as recognition of safe and responsible driving. Over time, the percentage of NCB increases with each claim-free year, making it a significant financial advantage. 

Transferring your NCB when you buy a new car ensures you do not lose the benefits you have accumulated. This transfer allows you to enjoy reduced premiums on your new policy, thereby saving money while continuing to be rewarded for maintaining a good driving record. 

What is a no-claim bonus in car insurance?

The no-claim bonus in car insurance is a discount insurance companies offer you for not filing any claims within that specific policy tenure. This bonus is a reward for safe and claim-free driving and an incentive to drive carefully and thereby avoid accidents. Here are some important points to know about NCB:

            A no-claim bonus discount can only be availed of the premium of your own damage coverage under your car insurance policy.

            NCB benefits can be accumulated for up to five consecutive years without filing any claim. It increases every year from 20% in the 1st year to a maximum amount of 50% at the end of the fifth year.

            NCB is valid for a specific period, even if you don’t own a car for a while. NCB can typically be retained for up to 90 days after the expiry of the previous policy.

            The NCB can be transferred from your old vehicle to a new vehicle if you sell your old one and buy a new one, as long as the new car insurance coverage is in the same name.

            The NCB is typically reset to zero at the next renewal if you claim during a policy period. However, if you avail of an ‘NCB Protector’ rider, you can make a limited number of claims without affecting your No Claim Bonus.

Eligibility criteria for NCB transfer

The eligibility criteria for an NCB transfer are simple. 

●      You must have a current insurance policy with no claims.

●      NCB transfer usually works only for the same type of vehicle (car-to-car, bike-to-bike).

●      You need proof of your NCB from your current insurer (a certificate or a renewal document).

●      If you made a claim during your policy, NCB cannot be transferred.

Step-by-Step guide to transfer NCB to your new car 

Transferring the no-claim bonus from your old car to a new car involves some simple steps.

Get a no-claim bonus (NCB) certificate

Once you sell your old car, you need to obtain a no-claim bonus (NCB) certificate from your car insurance company. NCB certificate is a letter that confirms the accumulated no-claim bonus in your name, specifying the percentage of bonus you have accumulated over the years.

Get registration details for a new car

Once you purchase a new car, get the important registration details in order to transfer the no-claim bonus. When you purchase insurance for your new car, inform the insurance company about your existing NCB and provide them with the NCB certificate obtained from your previous insurer.

Transfer no-claim bonus to a new car

The new insurer will verify the NCB certificate and apply the corresponding discount to your new car insurance premium.

Submit the documents

Submit all the relevant documents as mentioned below for the transfer of NCB:

            NCB certificate copy

            Request letter to transfer the NCB to a new car

            The old car’s sale agreement copies

            Registration certificate for the new car

The insurance company verifies all the documents and then issues a new car insurance policy for a new car with the applicable NCB discount.

How to use NCB of old car insurance to reduce the new car policy premium?

When buying a new vehicle, many policyholders wonder if NCB can be transferred to another car and how to transfer NCB from the old car to the new car. Since the No Claim Bonus is linked to the policyholder, not the vehicle, it can be carried forward to lower the premium on your new car insurance policy.

●      Build NCB on your old policy: Stay claim-free on your current car insurance to accumulate a discount. The longer the time without a claim, the larger the NCB.

●      Get an NCB certificate: Ask your current insurer for a certificate or proof of your NCB after selling or replacing your car.

●      Keep the certificate safe: The certificate is usually valid for a few years, so you can use it even if there’s a gap before buying a new car.

●      Submit it when buying new insurance: If you are looking for clarity on how to claim NCB for car insurance, the key step is submitting your NCB certificate when purchasing insurance for your new car. The insurer verifies the details and applies the eligible discount.

●      Pay a lower premium: Your NCB helps reduce your new car insurance costs, rewarding your claim-free driving history.

How is NCB calculated?

NCB is calculated based on the number of consecutive claim-free years on a car insurance policy.

NCB applies only to the own damage portion of the premium, not to third-party insurance. The discount increases with each claim-free year and resets to zero if a claim is made.

What is the use of the NCB protect add-on?

The NCB protect add-on allows you to retain your No Claim Bonus even after making a limited number of claims during the policy year. Usually, a single claim can reduce your accumulated NCB at renewal. By protecting your bonus, this add-on helps you continue enjoying lower premiums in future years. Many policyholders also ask if the No-Claim Bonus can be transferred, and safeguarding it ensures you keep the benefit when moving to a new car.

Conclusion

To conclude, a no-claim bonus serves as an effective tool for encouraging safe driving habits and reduces the overall cost of insurance. With a simple process, you can effectively transfer your NCB from your old car to your new car, thereby enjoying a reduced premium on your motor insurance.

FAQs

1.       Is it possible to get the NCB transferred to a new car?

NCB can be transferred to a new car if the policyholder remains the same. The bonus belongs to the owner, not the vehicle. When you sell your old car, or it is declared a total loss, you can use the NCB certificate to claim the discount on the new car’s insurance policy. The transfer must be done within the certificate’s validity period.

2.       Should I buy separate car insurance policies for each of the cars I own?

Each car must have a separate insurance policy. NCB is linked to one policy and one vehicle at a time. You cannot use the same NCB for multiple cars. However, each car can earn its own NCB if it remains claim-free. Managing separate policies also ensures proper coverage and easier claim handling for each vehicle.

3.       Is it beneficial to try keeping the NCB intact?

Keeping the NCB intact is beneficial as it directly reduces your insurance premium. Over time, the discount can reach 50 per cent on the own damage premium. This leads to long-term savings. Maintaining NCB also reflects responsible driving and careful vehicle use, which helps lower overall insurance costs year after year.

4.       Will the NCB be transferred to the new owner in the event of a resale?

NCB does not get transferred to the new owner when a car is sold. The bonus is available only to the existing policyholder. Once the car is sold, the seller can request an NCB certificate and use it to insure another vehicle. The buyer must start a new policy without any NCB benefit.

5.       Is the NCB certificate valid across all types of vehicles?

An NCB certificate is not valid across all vehicle types. It can only be used for the same vehicle category. For example, NCB earned on a private car policy can be used only for another private car. It cannot be transferred from a car to a two-wheeler or a commercial vehicle. 

6.       How to retain accumulated NCB?

To retain accumulated NCB, avoid making claims for minor repairs and renew your policy on time. You can also opt for an NCB Protect add-on, which allows limited claims without losing the bonus. If you sell your car, make sure to obtain the NCB certificate promptly and use it within the validity period. 

7.       Can NCB drop to zero?

NCB can drop to zero if a claim is made during the policy period. Even a single claim can reset the accumulated bonus at renewal. This is why many policyholders avoid small claims and pay minor repair costs themselves. Using an NCB Protect add-on can help prevent the NCB from dropping after certain claims.

8.       What if my NCB certificate expires?

If the NCB certificate expires, the accumulated bonus cannot be used. Most insurers consider the certificate valid for up to three years, though this may vary. If you do not buy a new policy within this time, the NCB lapses completely. To avoid this, plan your vehicle purchase and insurance renewal within the validity period.

Explore more on car insurance

Easy access to more, check out these quick links