No Claim Bonus (NCB) in Car Insurance
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What is NCB or NCD in Car Insurance?
The no-claim bonus in car insurance is an incentive for policyholders to be more responsible and safeguard their vehicles against accidents & theft. This reduces the burden of claims for insurance companies.
How Does the No-Claim Bonus Work in the UAE?
The concept of a no-claim bonus (NCB) is quite simple. The typical tenure of a car insurance policy in the UAE is 13 months. If you do not file any claim during this period, the insurer rewards you with an NCB benefit. NCB in insurance enables you to get discounts on premiums at the time of renewal.
In a comprehensive car insurance policy, the premium includes third-party liability coverage and own-vehicle damage coverage. The third-party liability cover is mandatory and hence NCB discount is applicable only on own-vehicle damage cover.
The following example is helpful in understanding the concept.
Suppose Mr X pays a premium of AED 5,000 toward his car insurance policy. Here, the own vehicle damage premium is AED 4,000, and the balance of AED 1,000 is the premium for third-party liability insurance.
After the first claim-free year, Mr X gets a 20% no-claim bonus that is applicable to his own vehicle damage premium, i.e. AED 4,000. This translates to a cool saving of AED 800 on your car insurance premium. So, the premium payable for the next policy year is AED 3,200 + AED 1,000 = AED 4,200. If the premium and the NCB discount change in the subsequent years, the calculations are revised accordingly.
How to Calculate No Claims Bonus (NCB) in Motor Insurance?
Particulars
No-Claim Bonus Discount
After the first claim-free year
20%
After two consecutive claim-free years
25%
After three consecutive claim-free years
35%
After four consecutive claim-free years
45%
After five consecutive claim-free years
50%
Note: The NCB discount is generally restricted to a maximum rate of 50%. Once you reach this limit, the sunset period commences. Despite further claim-free years in the future, the NCB discount remains capped at 50%.
Benefits of NCB in Vehicle Insurance
Policyholders can enjoy significant savings in premiums ranging between 20% to 50%. This alleviates the burden of increasing premiums for people who are budget-conscious
The NCB encourages you to be cautious and safe while using your vehicle. Reduction in accidents, mishaps, and theft is beneficial for policyholders and insurers alike.
The no-claims discount is linked to the individual and not the vehicle. This benefit can be availed even if you sell your existing car and purchase a new one.
NCB benefit is portable, i.e. it can be easily transferred if you switch the insurance provider later. All you need to do is get the NCB certificate from the previous insurer and submit the same to the new insurer.
How to Transfer the NCB to the New Car Insurance?
Situation 1: If you switch between insurance providers either with the same or a new car.
Enquire with the new insurer whether an NCB transfer certificate is required to effect the transfer.
If the NCB certificate is required, obtain the same from the previous insurer and submit it to the new insurer along with other documents.
Please provide the details of the previous policy, i.e. name of the insurer and the policy number, to the new insurance provider.
Note: Some insurers may transfer the NCB benefit without issuing a certificate for the same.
Situation 2: If you change the car but not the insurance provider.
You can transfer the car insurance to the new owner. In case the buyer opts for a new policy and does not require the old one, you can cancel the same.
Please inform your insurance provider that you want the NCB benefit to be transferred. The insurer will take the necessary steps to issue new car insurance with a no-claim bonus.
Know more about:
Documents Required for NCB Transfer
Emirates ID
UAE government ID card
Registration Certificate
Copy of the vehicle’s registration certificate
Insurance policy
Valid car insurance policy documents
NCB certificate
NCB certificate from the existing insurer
Things to Know About NCB in Car Insurance
When is NCB Terminated?
The no-claim bonus in car insurance gets terminated under the following two situations.
If the policyholder makes any claim during the policy period, the NCB benefit shall be withdrawn by the insurer
The policyholder does not renew the car insurance within a period of 90 days from the date of expiry of the policy
Note: The insurer may also terminate the NCB if the policyholder sells the vehicle and fails to transfer the NCB to another insurer or policy within a specified period
Is NCB Applicable to Third-Party Insurance?
NCB is not applicable to third-party liability insurance. This is a mandatory cover that provides protection to vehicle owners against legal claims from third parties arising due to the insured vehicle. Hence, there are no benefits or add-ons associated with third-party insurance.
However, policyholders can claim NCB on the ‘own damage premium’ if they purchase a comprehensive car insurance policy.
You may also like to read about other car insurance add-on covers:
Frequently Asked Questions on NCB in Motor Insurance
When can I avail of the no-claim bonus benefit?
You can avail of the no-claim bonus in car insurance at the time of renewing the policy and obtain attractive discounts on the premium payable.
Can minor claims on my car insurance affect the NCB?
NCB in insurance is given only in respect of claim-free years. If you file any claim during the year, you will lose the benefit irrespective of the size of your claim.
Do I end up losing the NCB benefit if I sell the car or change the insurance provider?
No. NCB in vehicle insurance is linked to the individual. It can be transferred to the new insurance policy if you buy a new car or change the insurer.
Can third-party claims in car insurance terminate my no-claim bonus?
NCB is not applicable to third-party liability insurance. Hence, third-party claims have no effect on the no-claim bonus.
How do I retain my NCB benefits accumulated over the past few years?
Insurers generally terminate your NCB if you raise any claim during the policy period. If you have five or more claim-free years, it’s a wise move to purchase the no-claims discount protection and safeguard your benefits. This is an add-on car insurance coverage that involves an extra premium. It helps you retain the bonus despite making some claims during the period.
Disclaimer : The NCB in Car Insurance may have limitations, exclusions, and other terms and conditions that may affect coverage. please read the policy wording documents carefully as they detail the terms and conditions under which your policy will cover your vehicle.