Do you know that you can protect your bonus in your car insurance policy by opting for No Claim Bonus Protection cover? When you buy any new two-wheeler or car insurance policy you don’t get any No Claim Bonus. After the first claim-free year you get a bonus at the time of renewal of the car insurance policy and that is called a No Claim Bonus (NCB).
For the first claim-free year you get a 20% bonus. On completing two consecutive claim-free years you get the 25% No Claim Bonus. You can accumulate the No Claim Bonus maximum of up to 50% in your policy. But when you get a claim during the policy term, your No Claim Bonus becomes zero. However, You can protect it by opting for No Claim Bonus Protection cover. In this article, I will write a complete detail about it.
What is No Claim Bonus Protection Cover?
No Claim bonus protection cover is an add-on that is designed to protect your No Claim Bonus even if you have claimed in a policy year. For example, if you have not claimed for three consecutive years then you have 35% of NCB. In case you get a claim in the fourth year then your bonus should become zero.
But if you have no claim bonus protection cover in your policy then the NCB will not be zero. Let’s better understand this assumed example
|Mr. Vikas||Mr. Shailendra|
|Suppose, Vikas, Purchase a comprehensive insurance policy for his car from HDFC Ergo.||Shailendra, Purchase a comprehensive insurance policy with a No Claim Bonus Protection Add-on.|
|Accumulated 35% of the No Claim bonus because he didn’t file any claim in three consecutive years.||He also accumulated 35% of the No Claim Bonus|
|In the fourth year, he took a claim.||Mr. Shailendra also got a claim in his fourth policy year.|
|in this case, no claim bonus becomes zero||However, here no claim bonus didn’t get zero because he has no claim bonus protection cover.|
|He didn’t get any No Claim Bonus discount at the time of policy renewal.||He gets a No Claim Bonus discount at the time of renewal.|
Mr. Shailendra is not losing his No Claim Bonus at the time of renewal because he has no claim bonus protection cover.
Benefits of No Claim Bonus Protection
Basically, it protects your No Claim bonus in your motor insurance policy. Normally this add-on helps you to retain your bonus even after two claims in the policy term. Different companies have different guidelines regarding this add-on. Better you read your policy terms and conditions.
It is a very useful add on the cover and you can opt for this. NCB protection cover is not available in short-term motor insurance policies.
Who Should Buy?
Ideally, anyone can take no claim bonus protection cover. There may be a situation where you cannot control damage in your vehicle. Raising the claim will vanish your no-claim bonus.
In this case, no claim bonus protection cover may be beneficial. Below are the preferable situations where you can select this add-on cover in your motor insurance policy: Someone who doesn’t want to lose an accumulated no-claim bonus, Someone who doesn’t drive safely, and New and Luxury cars.
Please remember that you renew the policy on time. To avail of the No Claim Bonus benefits you need to renew your policy maximum within 90 days of the expiry date of the policy.
Premium For No Claim Bonus Protection
The premium for no-claim bonus protection cover varies from company to company. Normally it may cost you 5 to 10% of your basic premium. You can also do calculative work before you opt for this add-on cover in the policy. If you think saving your NCB is a better option then you should purchase this add-on cover.
Can You Transfer NCB?
Yes, you can transfer the No Claim bonus of the existing car to a new car also. If you are selling your existing car then you can retain the No Claim bonus and use this bonus when you purchase a new car.
You can easily get a No Claim Bonus Reservation letter from your insurer. It is not mandatory to use the reserving letter immediately. You have certain validity of this letter and you can use this later also.
Buying No Claim Bonus Protection Cover is a Good Decision or Not?
Buying no claim protection is normally a good decision. It has the good benefit of protecting your No Claim Bonus even if you have a claim in the policy. The premium of this add-on is also not too much. However, you need to do some homework to analyze the benefits.