Explained: How To Transfer Your No Claim Bonus in Car Insurance

By
Daily Excelsior
-

If you’re switching your car insurance provider or selling your vehicle, you might be wondering what happens to your No Claim Bonus (NCB). The good news is that you can transfer it. This guide will walk you through the simple steps to ensure you don’t lose your well-earned discount and can continue enjoying lower insurance premiums.

What is NCB in Car Insurance?

NCB in car insurance is a reward given to policyholders who do not make any claims during their policy term. It is offered as a discount on the car insurance renewal premium and can reach up to 50% after five consecutive claim-free years.

How NCB Works

Each claim-free year increases your NCB discount as follows:

  • 1st year: 20% discount
  • 2nd year: 25% discount
  • 3rd year: 35% discount
  • 4th year: 45% discount
  • 5th year and beyond: 50% discount

This discount applies only to the own damage (OD) component of your premium, not the third-party liability portion.

Why is Transferring Your NCB Important?

Your NCB is tied to you as the policyholder—not to your vehicle. This means you can transfer your NCB when you:

  1. Change your car insurance provider
  2. Sell your existing car and buy a new one
  3. Upgrade from a used vehicle to a new model
  4. Move from one insurer to another while keeping your NCB benefits intact

Failing to transfer your NCB could result in losing your discount, leading to higher premiums and unnecessary costs over time.

Steps to Transfer Your NCB Benefits

Step 1: Obtain an NCB Retention Certificate

When switching insurers or selling your vehicle, request an NCB retention certificate from your current provider. This certificate serves as proof of your claim-free years and enables the transfer.

Step 2: Gather the Necessary Documents

To process the transfer, you’ll need:

  • A written request to transfer the NCB
  • A copy of your previous car insurance policy
  • A copy of the vehicle’s sale agreement (if applicable)
  • A copy of the Registration Certificate (RC) of the old or new car
  • The NCB retention certificate from your previous insurer
  • A completed transfer form, if required by your new insurer

Step 3: Apply for the Transfer with Your New Insurer

Submit your NCB retention certificate and supporting documents to the new insurer. After verification, the NCB discount will be applied to your new policy.

Step 4: Verify the NCB on Your New Policy

Once the transfer is processed, review your new car insurance policy to confirm that the NCB in car insurance has been applied correctly. If there are any discrepancies, contact your insurer promptly.

Key Rules to Remember for NCB Transfers

  1. NCB applies to the policyholder, not the vehicle
  2. Transfers are allowed only within the same category of vehicle (e.g., private car to private car)
  3. If you file a claim before switching, your NCB resets to zero
  4. The NCB discount applies only to the own damage premium, not to third-party premiums

Benefits of Transferring Your NCB

  1. Significant Cost Savings
    Transferring your NCB can save you up to 50% on the own damage component of your premium—potentially thousands of rupees over time.
  2. Flexibility to Switch Providers
    You are free to explore better deals with other insurers without losing your accumulated benefits.
  3. Lower Premiums on a New Vehicle
    If purchasing a new car, your transferred NCB can reduce the insurance premium from day one.
  4. Maintains a Clean Insurance Record
    Transferring your NCB highlights your good driving history, which can help when negotiating policy terms.
  5. Increased Long-Term Savings
    The longer you go without filing a claim, the more you save through increasing NCB percentages.
  6. Promotes Safe Driving
    Knowing that a claim could reset your NCB encourages more responsible driving habits.
  7. Aids in Financial Planning
    Lower premiums due to NCB help you allocate your finances more efficiently.
  8. Smoother Policy Renewals
    Insurers value customers with a solid driving record, often resulting in easier renewals and improved service.

Common Mistakes to Avoid When Transferring NCB

  • Forgetting to request the NCB retention certificate before switching insurers
  • Delaying the transfer, risking expiration of NCB eligibility
  • Failing to check if the correct discount has been applied in the new policy
  • Believing that NCB applies to third-party premiums—it does not
  • Not informing your insurer promptly after selling your car
  • Neglecting to submit all required documentation

Conclusion

Transferring your NCB in car insurance is a straightforward and savvy way to reduce your premiums. It ensures that the rewards for your responsible driving follow you—even when changing insurers or purchasing a new vehicle. Since car insurance premiums can be significantly lowered through NCB, understanding how to transfer it is essential to getting the most value from your policy.

WhatsApp Icon Follow our WhatsApp channel