Essential Facts Regarding Non-Claim Benefit (NCB) in Auto Insurance Policies
Every car owner in the UK is required to have car insurance, and one aspect that can significantly impact the cost of your premium is the No-Claim Bonus (NCB). Here's a guide to help you understand the key aspects of NCB and how it can benefit you.
**What is NCB?**
NCB is a discount reward given by insurers on the own damage (OD) premium portion of your car insurance when you do not make any claims during the policy year. It encourages responsible driving by reducing your renewal premiums.
**How much discount does NCB offer?**
The discount starts at 20% after the first claim-free year and increases each consecutive claim-free year, capped at 50% after five years without a claim. For example, after one claim-free year, your renewal premium on the OD cover could be reduced by 20%, and by the fifth year, the discount could be as high as 50%.
**NCB is applicable only on Own Damage (OD) premium**
It does not apply to the third-party premium, which is fixed as per government regulations.
**Claiming NCB**
To claim NCB, you simply need to renew your policy without any claims made during the policy period. Any claim filed within the policy year resets your NCB to zero, meaning you'll lose the accumulated discount.
**Transferability and protection**
NCB is usually transferable when you switch insurers, but you must provide proof of your previous claim-free history. Some insurers also offer "NCB protection" add-ons to allow limited claims without losing the bonus.
**Calculating NCB savings**
For example, if your 1st-year OD premium is £22,000, after one claim-free year, applying a 20% NCB reduces the next year's premium to £17,600, saving you £4,400. This saving increases with claim-free years.
**Important points to remember**
Individuals buying their first motor insurance policy are not entitled to any NCB discount. In case of an accident, the insurance company covers all expenses related to the accident. Making a claim during any year results in losing the NCB benefit for the next insurance renewal. The NCB amount increases with consecutive claim-free years: 25% after two years, 35% after three years, 45% after four years, and 50% after five years.
Knowing and maintaining your NCB by avoiding claims where possible can significantly lower your car insurance premiums over time. It rewards safe driving and helps reduce insurance costs steadily with every claim-free year.
Personal finance is an essential aspect to consider when managing car insurance costs. The No-Claim Bonus (NCB) is a personal-finance tool provided by insurers that rewards claim-free driving with discounts on the own damage (OD) premium portion of car insurance. For example, after one claim-free year, your renewal premium on the OD cover could be reduced by 20%, saving you £4,400 if your 1st-year OD premium is £22,000, demonstrating the impact NCB can have on your personal finances.
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