Are you a safe driver? What if you are told that you will be rewarded for having a safe pair of hands? A No Claim Bonus does just that! You can benefit from being a safe driver and not making a claim when you renew your insurance policy by taking advantage of a clause known as the No Claim Bonus. The clause has been designed to reward and encourage drivers to be safe on roads. If you have not claimed insurance for damages to your vehicle or to self in the preceding year, you are eligible for a No Claim Bonus the subsequent year. The greater the number of years where one hasn't claimed insurance, the higher the discount offered. Will explain about this in further detail in the following paragraphs. A higher discount on account of “No Claims” makes your Car Insurance Policy more affordable.
The No Claim Bonus is a win-win mechanism for both the insurer and the insured. The insurer benefits from not having to pay during the period insured for. Some of that benefit gets passed on to the insured by way of a No Claim Bonus. With a No Claim Bonus, the insured has an indicative reference around what will be his/her premium amount the following year. For example, you own a hatchback car which is five years old. You haven't claimed insurance in the preceding five years. In this case, you are eligible for a discount of 45% on the premium. While the discount available is fairly standardized across insurers, it is subject to review and change. Therefore, it is important to understand this aspect before finalizing on your policy purchase and the insurer from whom you purchase the policy. Generally, the discount slabs are as follows: 20% for the second year, 25% for the third year, 35% for the fourth year, 45% for the fifth year and 50% for the sixth year. The saving potential stands at a minimum of Rs.2,400 (at 20%) to a maximum of Rs.6,000 (at 50%) on a premium of Rs.12,000 for a car insurance plan. The No Claim Bonus can be carried forward provided the policy is renewed within 90 days of the expiry date. A No Claim Bonus is applicable only to the “own damage” part of the premium. This translates to 80% of the policy premium. The premium for third-party damage constitutes the remaining 20%.
Your No Claim Bonus stands invalid under the following primary conditions (besides others as specified by your insurer):
Here are a few suggestions you might want to consider while utilizing your No Claim Bonus:
