While sometimes it becomes imperative to raise vehicle insurance claims in case of damages or theft, there are some benefits attached to the condition when you do not raise any claims.
Policy holders who do not raise any vehicle insurance claims are eligible for certain types of benefits. No Claim Bonus
is one of those benefits that such auto insurance Policy
holders enjoy over a period of time. The amount of No claim bonus
can be anywhere in the range of 20%-50% of the car insurance premium, depending on the number of years and certain other conditions.
No claim bonus is calculated on the basis of the total amount of Premium
and deducted from the same. For instance, if the total amount of auto insurance premium due on your policy is coming at Rs 10,000 and you are eligible for a 25% no claim bonus, you will be required to pay Rs 7,500 towards the premium.
No claim bonus could be considered as a reward for being a good driver and keeping the vehicle protected against any damages and theft. Looking at the percentage of NCB over the total car insurance premium, we can say that it is a great way of reducing the liability of paying insurance premium in a progressive way. The amount of no claim bonus keeps increasing year by year.
For example, if you do not raise any claims in the first year, you may get a no claim bonus of 20% on the total car insurance premium in the next year. Again, if you do not make any auto insurance claims in this year too, you will be eligible for a no claim bonus of 25%. Further in case of no claims in the third consecutive year, you get entitled to a 35% no claim bonus and in the sixth year, you can reduce your premium amount by availing a no claim bonus of as much as 50%, provided you do not raise any auto insurance claims throughout these years.
However, if a policy holder raises claim in a given year, the benefits of no claim bonus are lost in the corresponding year. This also affects the percentage of no claim bonus for the next year to a certain extent.
Also, it is not advisable to raise claims which are less than the amount of no claim bonus due in the next year. For instance, if the amount of insurance claim is coming at Rs 1,500 against the no claim bonus entitlement of let’s say Rs 2,500, it is better to not raise the claim.
Another very important fact that a vehicle insurance
buyer should bear in mind is that the no claim bonus can be availed if the policy is not renewed within 90 days from the due date. Thus, a delay in auto insurance policy renewal can affect the amount of premium in a significant way.