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No Claim Bonus in Car Insurance
May 18, 2023

● If you are a savvy shopper, you always look out for rewards such as discounts, coupons, vouchers, etc. After all, rewards are an extra incentive to help you save money and make your purchase more enjoyable. So, why not take advantage of it to get the most bang for your buck?

● Likewise, a car insurance company rewards you with something called a “No Claim Bonus” for not making a claim in a particular policy year. It is offered as a token of appreciation for keeping your vehicle in good condition and for being a responsible driver.

● What is a No Claim Bonus? How does it work? Let’s find out!

No Claim Bonus

● A No Claim Bonus is a reward that you get from an insurance company for not making any claims during your policy period. It encourages you to take better care of your vehicle, stay safe on the roads, and be more mindful of your driving habits.

● The NCB is given in the form of a discount, which reduces your car insurance premiums - helping you save money.

Note: Depending on the insurer, the NCB percentages may differ.

How Does A No Claim Bonus Work?

As mentioned earlier, if no claim is made during the policy year, you will receive a discount on your renewal premium for the next year. It will be reduced by a certain percentage.

Let’s understand the concept with an example -

Nawaz has been maintaining a safe driving record and for an entire policy year, he did not make any claim on his car insurance policy. The insurer rewarded him with a 20% No Claim Bonus for the same. And, the renewal premium to be paid by Nawaz is AED 2500. When the renewal date approached, the insurance company applied the 20% No Claim Bonus, resulting in a premium of AED 2000. In this case, he will just have to pay the discounted premium.

Impact Of Making A Claim On The No Claim Bonus

If you make a claim on your policy, you will lose any No Claim Bonus you've accrued. This means that you won't get a No Claim Bonus discount on the premium during the next renewal of your car insurance.

Transferring NCB when you change insurer

If you wish to change your insurer at the time of renewal, you will obviously want to keep your No Claim Bonus intact - so you can avail of the premium discount you're eligible for. And, yes, it is possible to transfer your No Claim Bonus from one insurer to another.

For this, you will need to -
1. Get a No Claim Bonus transfer letter/certificate from your current insurer. Some insurers may charge around AED 50 for the same.
2. As soon as you receive the transfer certificate, you can submit it to your new insurer.
3. The No Claim Bonus will then be applied to your new insurance policy.

Wrapping up!

Besides protecting your vehicle, your car insurance also rewards you for being a safe and conscientious driver by offering a No Claim Bonus. This bonus motivates you to remain responsible and cautious behind the wheel, ultimately protecting not just you and your car but also third parties. Also, read your policy wording carefully to understand the NCB percentage applicable to your policy.

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