How NCB of Old Car Insurance Can Help to Reduce New Car Policy Premium

Written by on October 23, 2021 in Investing and Insurance, Uncategorized with 0 Comments

Following traffic rules and safety measures can not only minimize the chances of accidents, but it can also avoid car damages or injuries to you. Another advantage is that you can retain the No Claim Bonus (NCB). Your car insurance provider offers you this bonus if you do not make any claim during a year. You can accumulate the NCBs for every subsequent claim-free year up to a set limit. You can also transfer the NCBs of your existing car to a new one. Read on to know about the process in detail.

What is NCB?

NCB is a discount on your own-damage or comprehensive car insurance premium if you do not raise any claim during a policy term. It can accumulate up to a maximum of five years, and you can receive up to a 50% discount on the premium. You can receive the NCB even if you change your insurance company. Let’s look at how the NCB accumulates year on year.

An NCB comes in handy if you have to renew car insurance or purchase a policy for a new car after selling the previous one. You can buy a new car insurance policy at a reduced premium by utilizing the NCB.

How To Use NCB Of Old Car Insurance for New Car Policy Premium Reduction?

 There are two ways you can use the NCB earned on an old car policy to reduce the new policy’s premium.

1. If you sell your car to purchase a new one:

You may have earned an NCB on your car’s insurance policy but decide to sell the vehicle to purchase a new one. In this case, you can use the accumulated NCB during policy purchase for the new car. This benefit is applicable even if the insurance policy has been transferred to your car’s new buyer. Remember to obtain the NCB certificate from your insurance provider if you want a discount on the new car insurance purchase. You will receive a discount whether you buy offline or online car insurance.

2. If you retain the old car and buy a new one:

You can claim NCB benefits while purchasing a new car policy even if you decide to

retain the old car. But, you need to transfer the ownership of the vehicle. Or, you may sell it to a family member to avail of the NCB-aided discount on the new policy premium.

When making an NCB claim for discounts on your new car insurance premium, note that the feature is available only for an own-damage policy. Accordingly, the insurer will adjust the premium value, and you will get a discount based on the insured declared value (IDV) of the new car.

Here’s how you can accumulate and transfer NCBs:

  • Earn NCB on your existing car.

Drive carefully and follow the safety rules. Do not raise claims for minor repairs or replacements if you can afford them. It will help you accumulate the NCBs. However, do not burden yourself unnecessarily if the car is severely damaged and requires huge repair costs. In that case, don’t hesitate to file a claim.

  • Retain the NCB.

NCB increases for every claim-free year up to five years. The maximum discount on the premium can be 50%. From the sixth year, you will continue to receive the discount if you do not claim or miss your renewals. If you buy a new car, you can transfer the accumulated NCB from your existing plan to the new policy. You will get the 50% discount on your new policy premium.

  • NCB certificate

For transferring the NCBs from an old policy to a new one, you must get a certificate from your insurer. It is a supporting document or proof of the transfer.

      • If you buy a new policy from your existing insurer, you can apply for an NCB certificate.
      • If you buy a new policy from a different company, you must get an NCB transfer letter and the certificate to receive a discount.
      • If you sell your car to a third party, you must retain the sale invoice and deed required during NCB transfer. The other required documents include a copy of the old car’s delivery note and insurance policy, a copy of the new car’s booking form, and a transfer application.

Transferring the NCBs to your new car is a no-brainer. You only need to accumulate the NCBs on your existing or old car insurance and then shift them to a new policy. All you need to do is follow the safety rules while driving to avoid any claim-filing situation. In return for zero claims, you can enjoy the benefits of a discounted premium on your new policy.

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