No Claim Bonus - How to save on your insurance premiums!

Do you know you can save as much as 65% on your new car’s insurance? Your insurance agent will never tell you that you can transfer a No Claim Bonus (NCB) from your old car, but a fellow Team-BHPian paid only Rs.10,700 for Rs.27,000 worth of insurance on his new car. He just transferred the NCB from his old Maruti Zen to reduce the cost of insurance for his Honda City Vtec. Why didn’t his agent volunteer information about this remarkable deal? Because the more a buyer pays the insurance company, the more commission its agent makes.

Most Indian car buyers negotiate on financing, dealer discounts and freebies but forget about the insurance component.

Team-BHP shows you how to use the NCB to save on your insurance premium:

1. When you sell your old car: The biggest mistake people make is transferring the insurance lock stock and barrel when selling a car. Ensure that ownership is transferred and make a photocopy of the new entry in the RC book for insurance purposes.

2: Obtain the NCB certificate: Forward a copy of the delivery note to your insurance company and ask for the NCB certificate or holding letter. This letter is valid for three years; you may find it easiest to go to your insurer’s local office to pick it up in person.

3: Use the NCB: Forward the NCB letter to your new car’s dealer. Voila! You have just transferred the NCB to your new car insurance and saved a bundle.

Remember to shop around; manufacturers’ insurance schemes are much cheaper than regular insurers’. In one case, insurance for an old Maruti 800 was quoted at Rs.4,800 when the official Maruti insurance was available for just Rs.2,800.

Another process, if you are happy with your existing insurance company, is to go to the insurer with your new car invoice and chassis number. The agent should use your NCB to offer a reduced premium and give you a cover note on the spot. The dealership will need this cover note to register your car with traffic authorities.

Insurance Tip: If you are buying a premium car, it would be wise to opt for zero depreciation car insurance. After all, premium cars are equipped with premium-priced parts. To read a positive experience with this type of insurance policy see how it worked out for Sam. 

FAQ

Q: I have not sold my old car and need to take delivery of a new one.
A: Go ahead and buy the new car: you cannot claim your NCB for the first year but make sure you get the NCB letter when you sell your old car. You can use the letter to reduce your second year’s premium.

Q: The NCB is a major saving – how can I preserve it?
A: A No Claim Bonus means just that – no damage claims on your car. Drive carefully, take security measures to protect your car and claim judiciously. If you have a 50% NCB for your Getz you are saving Rs.9,000. If your stereo is worth Rs.5,000 and gets stolen, do not claim it. Just pay for the new stereo yourself; it will cost less than losing the NCB saving. 

Q: I have a cheap Maruti 800 with a 50% NCB and want to buy a Honda City while keeping both cars.
A: One option to consider is to cancel the insurance on your Maruti and claim the NCB certificate for your Honda while insuring the Maruti with a different company. Another alternative is to transfer the Maruti’s ownership and insurance to your spouse or sibling and proceed as above.

Q: What about those free insurance schemes?
A: Try asking for a cash discount instead and buy your own insurance. The next best option is to use the NCB certificate during insurance renewal.

NCB when transferring a company vehicle to the employee: People using an Employee Car Lease program have the option of getting the benefit of the No Claim Bonus at the end of the lease period.

The NCB can be transferred when the company is transferring the vehicle to the employee. There is an endorsement clause in the Indian Motor Tariff GR 27 (e).

(e) "The percentage of NCB earned on a vehicle owned by an institution during the period when it was allotted to and exclusively operated by an employee should be passed on to the employee if the ownership of the vehicle is transferred in the name of the employee. This will however require submission of a suitable letter from the employer confirming that prior to transfer of ownership of the vehicle to the employee, it was allotted to and exclusively operated by the employee during the period in which the NCB was earned."

This will save the employee quite a bit of money. All you need is a letter from the employer as described above. Thanks to BHPian pjbiju for sharing this info.