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When a insured person doesn't get claim during the whole policy period on his vehicle then he will get some discount on the premium while renewing his policy, which is called no claim bonus.
How NCB can be effective while calculating premium?
We don't get NCB discount on liability's like third party, passenger cover, PA cover of owner driver, paid driver cover and CNG kit liability. We only get no claim bonus discount on own damage premium which is taken by the insurer in advance if the insured will get any claim on the vehicle in future. There is a slab of no claim bonus in the case the insured is not getting claim for consecutive years.
No claim bonus goes maximum upto 50%, if insured didn't get any claim for consecutive 5 years. Let's take a example:
Suppose an insured didn't get any claim for consecutive three years then his NCB should be 35% and in the fourth year he got claim. Then what would happen? If you are thinking that it will be decreased to 25%, then you are totally wrong. His NCB would be zero after getting claim in fourth year. Now suppose again he didn't get any claim in the fifth year then he will get 20% discount in 6th year and the slab will be start again.
What is NCB transfer?
Basically, NCB discount is not given to the insured vehicle but it is given to the owner of the vehicle for driving safe. So, if the insured want to sell the vehicle and wants to buy a new vehicle then, he has right to transfer his No claim bonus discount from old vehicle to new vehicle. He'll just have to go by some procedures.
What is NCB recovery?
NCB recovery is the process of asking the amount from the insured, which was given to the insured as a NCB discount(In case of incorrect NCB information).
Sometimes details given by the customers are incorrect or by some other mistakes, if the agent give him NCB while issuing the policy, wheareas he is got claim on the last policy then it occurs.
If the NCB gone increased by some mistakes or incorrect information also then company asks for the amount which the company had given to the customers as NCB discount. If the NCB recovery is not paid by the customer the policy may be cancelled and the insured won't get any claim settled in the future.
What if the policy has been expired?
Now many people will have a question that will they retain their NCB if the policy has been expired?
So, there is a duration if you renew your policy within the three months from the date of expiry, your No claim bonus will be retained. But if you renew your policy after the three months from the date of expiry in that case, you won't get any NCB. Your No claim bonus will be zero.
What if the ownership of the vehicle has been changed?
As we discussed earlier NCB is not given on the vehicle but it it is the discount given to the owner for driving safe. So in the case of ownership change of vehicle. The earlier owner can retain the NCB on new vehicle by NCB transfer. But the new owner of that car won't get NCB.
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