How to use NCB of old car insurance to reduce new car policy premium


How is the NCB claimed on new car insurance policy?
Sajja Praveen Chowdary, Head-Motor Insurance, Policybazaar.com explains, “For instance, if you purchase an insurance policy for a brand new Maruti Baleno, the authorised dealer will offer you an insurance policy (1-year OD +3-year Third Party) which is expected to be in the range of Rs 30,700 for Rs 7.75 lakh of IDV with 0 percent NCB. However, if you utilise the maximum 50 percent NCB, this premium can get reduced to Rs 21,000-a saving of Rs 9,700. The reduction is not 50 percent of the full Rs 30,700 because NCB is only applied on OD premium.”


NCB is given to the car policy owner, not the car
The NCB is given to the insurance policy owner and not to the insured vehicle. Therefore, the NCB cannot be passed on to another name, that is, to the new car owner. So, if you (seller) are migrating to another country and have sold the car to some other person, you can only transfer the policy to the buyer along with the car, provided you have informed the insurer. Kapil Mehta, CEO, SecureNow.in said, “Since the NCB cannot be transferred but the policy can be transferred to the new car owner, the NCB will be zero for the new car owner.”

You would have claimed the NCB discount on the OD part of the insurance premium when renewing the car insurance policy for another year. However, when you sell the car and transfer the policy, the new owner is not entitled to the NCB which you had used to get discount. Therefore, the new car owner will have to pay the insurer the amount of NCB discount earlier obtained (on pro-rata basis) for the balance of the policy period.

According to IRDAI website, “The insurer can charge a nominal fee for the transfer of insurance policy along with pro-rata recovery of NCB from the date of transfer till policy expiry. It may be noted that transfer of ownership in a comprehensive insurance policy has to be recorded within 14 days from date of transfer failing which no claim will be payable for own damage to the vehicle.”

However, Mehta said that the new car owner also has the option to buy a new insurance policy. “It is not necessary for you to get the policy transferred to the new car owner’s name,” he said.


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