We get a lot of questions on NCB or No Claim Bonus while buying a Motor Insurance Policy. So I thought to write a detailed post on NCB and NCB Certificate. This concept of using NCB Retention Certificate is a good way of decreasing your premium while replacing the vehicle.

What do you do with your existing insurance policy when you sell your vehicle to a third party or give it to the dealer for exchange? Well, I know most of you will say – Nothing.

Well, it is mandatory to have a vehicle insured at all times including re-registration while selling it. But the policy is in your name. So it gets lapse, the moment the Registration is transferred to a new owner. But you can save your future premiums, here by asking your insurance company – the NCB Retention Certificate or NCB Certificate as it generally called. Let’s learn this insurance trick in details. First, let me start with No Claim Bonus.

What is NCB or No Claim Bonus?

It is a discount offered by the insurance company based on the fact that you have not made any claims during last year on your insurance policy. You can think this as an award or incentive for your good maintenance and safe-driving of your vehicle.

This discount in the premium is 20% for the 2nd year, 25% for the 3rd year, 35% for the 4th year, 45% for the 5th year and 50% for the 6th year.

It is a huge saving for the policyholders. Also, the insurance company gets spared from small claims & paperwork involved.

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Can a policyholder transfer NCB?

The NCB belongs to the Car Owner or the policy owner & not the vehicle.

So, the NCB can be transferred from one company to another.

Normally while renewing a person makes a declaration that he has made no claims and based on claimless years he is entitled to the NCB discount in the new policy.

Here is what IRDA (Insurance Regulatory & Development Authority of India has to say about NCB.

Same way NCB can also be transferred between vehicles – Surprise? Here is how it can be done.

Suppose you are upgrading from a Wagon R to Swift Desire. You are selling the vehicle to the dealer so that the resale value is adjusted in the cost of the new vehicle.

Now when you are buying a new vehicle it will also be insured. So suppose on your Wagon R policy you have not made claims on the last 5 years. You can approach the insurance company for something called “NCB Certificate” or “NCB Retention Certificate”. Using this certificate you can get 50% discount on the premium of the new Desire.

What is an NCB Certificate?

It is a certificate where the policyholder can ask the insurance company to transfer the NCB for the new vehicle.

A sample copy of No Claim Bonus Certificate is shown here.

This certificate is issued to the individual (Policy Holder). So by using this certificate, you can save premiums on a new policy. This can be for any kind of vehicle of any other company or with any other insurer.

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How to get NCB Certificate?

You can get the NCB Certificate by writing to the insurance company. You have to also attach certain documents like copy of registration certificate of the old car, Form 29 (in case buying a new vehicle & getting NCB transferred) and ID proofs.

It takes around 3-5 working days to get the certificate.

I checked many websites but could not find an online process to apply for NCB Retention Certificate. Few online brokers like Coverfox have online/email process.

Some Tips to use NCB Retention certificate

TIP 1: Suppose you have an old Maruti 800 and planning to buy a Honda City. You can transfer the vehicle to spouse or relative. The new owner will have to buy a new policy for the vehicle on his/her name. You can get NCB certificate of Wagon R and use to save premium on Honda City. A 50% saving on the big vehicle will save you thousands.

TIP 2: Many time while buying a new vehicle the dealers insist that the insurance is bought through them. No problem. The NCB Certificate is valid for 3 years. Next year when the policy is due, use this certificate with the insurance company of your choice.

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Hope the article clears all doubt on NCB & NCB Retention Certificate. So now save money when you change your vehicle.