Car Insurance Perks: Exploring the 5 Features of No Claim Bonus (NCB)
In the realm of car insurance, one term that often comes up is the No-Claim Bonus (NCB). This discount on car insurance premiums is a reward for safe and responsible driving, encouraging policyholders to avoid claims wherever possible.
The NCB increases cumulatively with each claim-free year. Typically, after multiple consecutive years without claims (usually around 5-6 years), the maximum discount is achieved—this can range from around 30% after one claim-free year to up to 60-67% after several years, depending on the insurer and country.
However, making a claim during any year results in the loss of NCB benefit for the next insurance renewal. Yet, many insurers do not reduce the bonus if the claim is for incidents where the policyholder was not at fault. Some insurers offer NCB protection allowing a certain number of at-fault claims without affecting the bonus.
It's worth noting that NCB is usually attached to the individual policyholder and not the vehicle. Proof of NCB (such as a no-claim certificate) is required when renewing or switching insurers to ensure recognition of your claim-free history. This proof typically remains valid for up to 2 years after expiry, but you should confirm with the new insurer.
First-time car insurance policyholders are not entitled to any NCB discount. But, an NCB of 20 percent can be claimed on the first renewal of the policy if there has been no claim made during the past year. The NCB can grow up to 50 percent of the original insurance amount with consecutive claim-free years: 25 percent after two years, 35 percent after three years, 45 percent after four years, and 50 percent after five years.
Policyholders should consider the claim amount compared to the bonus amount before making a claim. It may be more beneficial to pay a smaller claim amount from personal funds and receive the bonus amount from the insurance company.
NCB is not available on third-party car insurance. The discount applies only to the own damage premium component. Car insurance requires a premium payment from every car owner, and in case of an accident, the insurance company covers the expenses.
In the digital age, buying car insurance has become easier than ever. The EMONEY app, for instance, allows you to buy car insurance in a paperless manner from top insurers. By understanding the key aspects of NCB, you can make informed decisions about your car insurance policy and save money in the long run.
Personal finance is an important factor when considering car insurance, as the No-Claim Bonus (NCB) can provide significant discounts on premiums. This bonus increases cumulatively with each claim-free year, reaching up to 50% of the original insurance amount after five years, assuming no claims have been made during this period.
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