No Claim Bonus (NCB) in Insurance

Insurance has become a crucial part of our lives as it helps us take care of our most valuable assets such as Cars, Bikes, Health and Life. Health insurance takes care of all the medical expenses in case of any hospitalization due to illness. Similarly, Car insurance will cover your financial expenses incurred on your car in case of an accident or loss due to theft, natural calamities, etc.

But do you know that an Insurance Company rewards those customers who don’t claim in a year with a No Claim Bonus? Yes, a No Claim Bonus or NCB in health insurance or Vehicle Insurance is a kind of bonus money added to the sum insured for every year when you don’t claim up to a specified limit decided by the insurance company. So, on every claim-free year, you can reap benefits for taking care of your valuable asset whether it’s your health or your vehicle.

Want to know more about how exactly No Claim Bonus works? Well, in this article, we will be telling you the same. Let’s begin!

No Claim Bonus in Health Insurance Policy

While choosing a Health Insurance Policy, an individual should look at several factors such as its coverage amount, premium amount, its key features & benefits, etc. No Claim Bonus is also considered as one of the most important factors to look at while finalizing the health insurance plan for yourself. We are showing some of the important things related to No Claim Bonus in Health Insurance that you should know. Please check!

1. As we stated earlier too, when an individual doesn’t make a Health Insurance Claim in the policy year, the company provides No Claim Bonus benefits. In the case of Health Insurance, No Claim Bonus is given via Cumulative Bonus, which means your coverage amount (sum insured) will increase to a definite percentage in the next year but the premium amount remains the same as the last year.

Let’s understand it in simple terms. Suppose you have a Health Insurance Plan with a Sum Insured of INR 3 lakh comes with a No Claim Bonus of 5% for every claim-free year. So, your sum insured will become 3,15,000 for the next year with the same premium amount. For two-claim free years, it would become INR 3,30,000 and so on.

1. Remember that your Sum Insured can be increased up to a maximum limit specified by the insurance company. This limit usually ranges from 50% to 100% of the Sum Insured and changes from one health insurance plan to another. Suppose a company provides a 10% Cumulative Bonus for every Claim-free year up to a maximum of 50% increase in the Sum Insured. So, if your Sum Insured is INR 5,00,000, it can be as high as INR 7,50,000 if there are consecutive 5 Claim-free years.
2. No Claim Bonus is available for both Individual and Family Floater Policies. So, in the case of a family floater policy, if no insured member makes a claim, the No Claim Bonus will be applicable in the next year. Apart from this, the Cumulative No Claim Bonus also helps you deal with the rising costs of health care treatment. Since your sum insured is increasing for every claim-free year, you could deal with inflation adequately and enjoy the benefits of your health insurance when you will need it the most.

No Claim Bonus in Vehicle Insurance

Vehicle Insurance is mandatory in our country that offers protection in case of an accident, theft, and some unfortunate circumstances that could make a dent in your vehicle. With Vehicle Insurance, you can protect your finances in any unfortunate event. But when a policyholder does not claim in a policy year, the insurance company provides a certain discount on the premium amount at renewal. This amount also keeps increasing every year up to a maximum limit. This benefit is known as the No Claim Bonus.

We are showing some important things related to the No Claim Bonus for both Car Insurance and Two-wheeler Insurance below. Do check!

1. The No Claim Bonus discount usually ranges from 20% to 50% on the premium amount and increases on every claim-free year up to 50% discount. However, on claiming in any year, the policyholder will lose the NCB Benefit for the next renewal of the policy.
2. There is an important thing that you should remember that insurance companies provide No Claim Bonus to policyholders and not to their vehicles. So, if you have a car for which you haven’t made any claim for 2 years, and you purchase a new car after selling the old one, the bonus will apply to the car insurance policy for the new car. Similarly, if you are transferring your insurance policy from one insurer to another, you will still be eligible to get a No Claim Bonus discount if you haven’t claimed yet.
3. The No Claim Bonus discount on Vehicle Insurance will not be available on the Third-party Insurance. No Claim Bonus discount is only applicable to the own damage premium component and not the third party liability premium (15% – 20% of the total premium amount). So, if you have third party insurance, you will not be getting any No Claim Bonus on your premium.