Definition: No-claim bonus (NCB) is a discount in premium offered by insurance companies if a vehicle owner has not made a single claim during the term of the motor insurance policy.
Description: The no-claim bonus is a reward to the vehicle owner for prudent use of the vehicle. For example, if you sell a 10-year old hatchback and purchase a C-segment car, the no-claim bonus will pass on to the new vehicle and you can save considerably on your insurance costs. It can be transferred to another insurance company subject to evidence in the form of a renewal notice or letter, confirming the NCB entitlement from the previous insurer.
This discount in the premium is usually 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 value of the discount depends upon the insurance claims you have made in that particular year. NCB can be carried forward and will be only allowed provided the policy is renewed within 90 days of the expiry date of the previous policy.
Read for the day: The Importance of Paste Special in Actuaries
Download Insurology app for Actuarial and Insurance Blogs and news.
Sent from my LLD-AL10 using Actuarial Info mobile app