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Is It Worth Protecting My No Claims Discount On Car Insurance?

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Car insurance is a financial safety belt which protects you in case of any accidents. It covers you and any third party liabilities. As the description suggests, there are a number of complications you might face in the hidden chamber of these policies. Let’s try and deal with one such chamber, called the No Claims discount.

What is a No Claims Discount?

The accumulation of discount in case of a claim free year on the motor insurance is referred to as No Claim Discount (NCB). This discount adds up to the number of years you go claim free, resulting in lower premium rates upon renewal. This was essentially announced to encourage people to drive safely, without any accidents.

A claim free year ensures the following years’ NCB. Some policies offer a generous amount and considerable premium rates upon renewal.

What happens if you make a claim?

As generous and alluring it may be sound, your bonus might vanish in an instant in case you make a claim. Situations where it might get terminated include:

  • If you’re hit by an uninsured driver
  • Claim made during a policy year will suspend the NCB for the next year.
  • Failing to renew the policy within 90 days of expiration of the existing policy.

Situations where it might get affected include:

  • In cases where you weren’t at fault, your policy provider might recover it from the concerned driver (at fault). This won’t affect your NCB.
  • In case of unidentified driver at fault, the claim cost might get split, affecting your NCB
  • In case of theft or vandalism where the vehicle couldn’t be recovered, your NCB might get affected in a certain manner.

*check policy wording and coverage areas to see unaffected NCB and the number of claims you can make in a year to be on the safe side.

Why protect your NCB?
 

To avail lower premium rates upon renewal and in some cases added benefits and reduced add ons. In case of any claims made due to unforeseen circumstances, your NCB remains unaffected.  You can avail your discounts after every renewal.

 

Renewal

Discount

First year renewal

20%

Second year renewal

25%

Third year renewal

35%

Fourth year renewal

45%

Fifth year renewal

50%

(The Economic Times, 2019)

*protecting NCB might not insure a static premium rate. It defers based on your claim history.

 

Locking In that bonus requires additional investment but losing it in an instant affects your premium negatively. This is especially important with the rates of premium rising each year.

More about the NCB

 

  • NCB is transferrable from one vehicle to other, given the policy holder remains the same. In case you switch the insurer before your expiration, you might not avail the benefits of the discount.
  • Some policies offer the NCB on only one vehicle.
  • It can be transferred to another policy holder at the time of renewal.
  • It is only applicable on own damage (OD) and can’t be availed for third party liability.

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