How to Avoid Making Minor Claims and Save Car Insurance NCB

A car policy offers financial security in case of a mishap or loss related to your car. As a policyholder, you hold the right to file a claim for any damage to your car. However, before making a claim, consider questions such as, “Should I claim insurance for minor damage? Can a no-claim bonus protection plan help in covering the losses better?” Assess the extent of loss, the impact on NCB (No Claim Bonus), deductibles to be borne by you, and future premium costs before making a claim. Here’s everything you need to know.   

What is NCB in car insurance?

No Claim Bonus or NCB is the discount offered by an insurer on your own damage (OD) or comprehensive car insurance for being a safe driver. Yes, it is the reward for driving safely and not raising any claim during the previous policy term. It begins only after you complete one claim-free year and is given a 20% discount on the premium amount for the next policy. With each passing claim-free year, you can go on accumulating NCBs until it reaches the peak of 50% of your premium amount. However, you must have consecutive claim-free years to be able to do that. Once you file a claim, you lose NCB, and then you must start accumulating it from the scratch. You will get an idea from the following table:

The NCB increases every claim-free year up to 5 years. The percentage of NCB offered depends on the insurance provider and may vary from one insurance company to another. 

Advantages of No Claim Bonus on car insurance premium:

• Discount on renewal premium

Filing a claim should not be the first thing on your mind whenever you see a scratch or a minor dent in the car. They are certainly covered but using the car insurance policy just for making the car look shiny and flawless will increase the future premium amount when you renew the policy. File a claim only when there is a major expense due to an accident or damage beyond repair, car theft, or replacement of major parts. Avoid claiming for expenses that you can afford and save the NCBs for discounts on your renewal premium.

• Lower premium on second car

If you want to replace the car and buy another one, you have the option of transferring the policy and carrying forward the NCBs for your new car. This way you can make a good amount of savings in the new policy premium even if you are switching insurers. The process of NCB transfer is simple and quick. Ask your previous insurer to transfer the NCB and issue an NCB certificate. When you approach the new insurer, present this certificate and NCBs will be transferred to the new policy.

• Good claim history

Filing insurance claims frequently will adversely impact your claim history and increase your renewal premium. The rate of increase in renewal premium could be due to repetitive claims, nature of the claims and terms of each insurer. So, try to maintain a good claim history by retaining NCBs.

How to avoid minor claims?

• Pay the minor repair cost

Suppose you face a minor accident. If you have not claimed in the previous year, you will get a discount of 20% on your next year’s premium. Calculate the NCB amount. This amount should be compared with the expected repair cost. If the cost of repair exceeds the amount of NCB, you should make a claim otherwise pay for it and get higher savings in future. When in doubt, ask a mechanic to take a look at the damage and estimate the cost.

• Claim through third-party liability insurance

Suppose your car was parked in the neighborhood and a third party hits your car, resulting in an ugly dent. Irrespective of the nature of the damage, you can claim insurance under the third-party liability insurance of the other car as you were not at fault. Raising claims under third-party liability insurance may take time but it would be the best option. You have to file an FIR at the nearest police station in such an incident.

• Deductibles

At the time of making a claim, you need to compulsorily pay a specific amount depending on the engine capacity, depreciation, and more. This is referred to as the compulsory deductible. There is also an optional voluntary deductible. Only after you pay the deductible amount, the insurer will pay the balance claim amount. So, before filing a claim, add the deductibles you will be paying to the NCB amount that you may lose. This is your total loss in terms of the insurance claim. If this loss is greater than the actual claim amount, pay for the damages yourself. Otherwise, you may raise the claim.

• NCB protection in car insurance

Wondering what is NCB protection in car insurance? It is an add-on cover that keeps the NCBs intact despite you making claims during the policy period. Generally, up to two claims are allowed in a policy year. You can benefit from the renewal discount irrespective of claims made. The terms and conditions of the cover will depend on the insurer.

When you claim minor damages without thinking about its impact on the NCB, you are at the risk of facing bigger losses than actually paying for repair work by yourself. When you renew the policy, you will realise that the cost of the policy has increased. So, file a claim only if there is a need for significant repairs or theft and buy an NCB protection plan.