Did you know: You can get a no-claim bonus while insuring your new car
The no-claim bonus belongs to the policyholder and not the car
An insurance policy essentially covers uncertainties. In case of car insurance, it covers any damage due to an accident or the loss due to theft. However, it often happens that over the policy period of your car insurance, you do not make a claim. No claims indicate that you take good care of your car and are a safe driver. This no-claim year helps you get a lower insurance premium for the subsequent year or years.
Importantly, this bonus belongs to the policyholder and not the car. So, if you plan to change your car, even buy a new car, you can still have this benefit. You can also get it if you decide to switch your car insurer. You will need a no-claim bonus certificate from the previous insurer to do this. In fact, by managing your no-claim bonus, you can reduce your car’s insurance premium outgo significantly.
No-claim bonus
If you have a car insurance policy, you would have come across the term ‘no-claim bonus’. It is the discount, or an incentive, that you get on your insurance premiums for each year that you don’t make a claim. For car insurance, it comes as a discount on the own-damage part of premium for the subsequent year.
After the first year without a claim, you get a discount of 20% on the premium. For each subsequent year, this discount would increase by 5% till it reaches 50% after 5 years without any claims. For instance, the own-damage insurance premium for a diesel-powered Maruti Swift, bought in 2013 in Delhi, is around Rs5,200. If no claims have been made since it was originally bought, you can get a 35%, or about Rs1,800, discount on this component.
Things to remember
You should make sure that you renew your policy on time. While some insurers allow a car insurance renewal for up to 90 days from the date of expiry of policy, others may not be so flexible.
So if you fail to renew the policy in time, you might end up losing the benefit that you had actually earned and hence rightfully deserve. Also, policy cancellation could lead to losing the discount.
The bonus or discount is applicable only on the own-damage part of the insurance. There are no discounts on the third-party cover, which makes about 30-35% of the total premium cost.
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