Transferring the No Claim Bonus on your motor policy.

No claim bonus is a way of insurance companies motivating you to prudently use your vehicle so that no claims are incurred on the insurance during a policy period. For every claim free year you complete, your No claim Bonus percentage increases in a set pattern. No Claim Bonus can be accumulated over a period of time- usually for the first claim free year, you are awarded 20% discount and it increases up to 50% of premium discount. This premium discount is applicable only on the Own Damages premium portion and not on the Third Party premium. Once a claim is registered on your motor policy the NCB drops back to 0% and will start accumulating from the next claim free year.

One of the most important points you need to remember is that the No Claim Bonus belongs to the individual car owner or the driver and not to the vehicle. The NCB is offered to the driver/owner of the vehicle for safe usage of the vehicle. This means that your NCB can be transferred to the next car you purchase. In case you are planning to sell your vehicle and not purchase a new one immediately, you can get the NCB transferred to your name from the existing insurance policy of the vehicle you are going to sell.

If you are planning to sell the car and have not agreed to provide insurance to the buyer in the sale deed, then you can ask the insurance company to cancel the insurance policy and issue an NCB transfer letter. This NCB transfer certificate is valid for 3years from the date it is issued. In case you have to provide the insurance cover and certificate to the new buyer as part of the sale agreement, you can pay the prorate NCB amount you benefited under your current policy to the insurer and then ask the insurer to issue you a NCB transfer certificate. The prorate NCB amount that has to be paid to the insurer in such cases would be nominal considering the fact  that you would be getting the NCB discount applied on the premium applicable on your new car. A 50% NCB on your old car which has an IDV of Rs.1.5lakhs and 50% of NCB on the new car with an IDV of Rs.6.5lakhs- which is more beneficial? You can apply for an NCB certificate within 90 days from the date of sale.

NCB can also be transferred to the legal hire as inheritance.