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Say your car is eight years old and, as you haven’t claimed any motor insurance, the no-claim bonus (NCB) on your car amounts to a 50 per cent discount on the premium. You plan to buy a new car next year. But, in the meantime, your car is involved in an accident and the cost to repair it works out to about Rs 20,000. Should you claim insurance for repairing the vehicle? In this case, probably not, says Deepak Yohannan, chief executive of MyInsuranceClub. “The 50 per cent discount on the premium you are eligible for could be quite beneficial if you are upgrading to a bigger car. Otherwise, you will have to pay a hefty premium for the new car. So, pay for repairing your old car on your own and use the NCB discount for your new car,” he adds.
If you aren’t selling the old car, you could buy insurance for it. As the car is old, the premia will be lower, he adds. But remember, you cannot claim NCB on both cars.
Customers can avail of NCB benefits in the form of a discount on the premium at the time of renewing the insurance, provided no claims have been made. The discount starts at 20 per cent in the second year, 25 per cent in the third year, 35 per cent in the fourth year, 45 per cent in the fifth year and 50 per cent in the sixth year. This is portable across vehicles and across insurance companies.
“The policyholder needs to submit evidence that the old vehicle has been insured through another policy,” says Vijay Kumar, chief technical officer (motor insurance), Bajaj Allianz General Insurance.
The NCB is applicable only if the new vehicle is of the same class as the previous one. This means if you have accumulated an NCB on your car that is being used as a taxi (commercial vehicle), you cannot transfer it to a car meant for private use. Similarly, if you accumulate an NCB on your two-wheeler and upgrade to a car, you cannot transfer it, Kumar adds.
While transferring the NCB to a new insurance company, you must provide either a renewal notice or a letter confirming the NCB entitlement from the previous insurer.
“NCB is very good feedback about the driving ability of the car owner and the maintenance record. As there are no records of this information in India, NCB is a proxy for such data. So, protect your NCB, as it is a reward for safe and good driving,” says Sanjay Datta, chief (underwriting and claims), ICICI Lombard General Insurance. Therefore, it is advisable to keep small maintenance issues out of insurance and claim for real damages alone, he adds.
“Ideally, claim insurance only if the cost for repair is at least Rs 10,000. If you claim insurance for everything, your NCB is impacted,” says Yohannan.
In case your vehicle is damaged in an accident in which you are not at fault, does it make sense to claim the amount from the person who caused the damage instead of claiming your insurance?
Following an accident involving at least two cars, each insurer pays for the vehicle damages concerned, irrespective of who causes the damage. So, if you claim your insurance, you take a knock on the NCB, irrespective of whether you caused the damage or not. To prove you didn’t cause the damage, you will have to file a police complaint and follow up on the court case to make the other party pay for repairs to your vehicle. As this is a cumbersome process, it is very difficult to get money from the insurer of the other car involved in the accident, says Datta.
