June 8, 2023


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Use NCB of old vehicle insurance policy to reduce new vehicle policy premium

NCB is a benefit that accrues to the policyholder if no claims are made during a policy period. Hence, at the time of renewal, you get a discount on the premium (NCB benefit) which starts from 20{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} and increases up to a maximum of 50{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} over every claim-free period till 5 years. However, you must know that the premium discount can be claimed only on the own damage (OD) part of the comprehensive motor insurance policy.

While renewing the policy, the NCB benefit is given to the motor insurance policy owner and not to the insured vehicle. The NCB is never passed on to the new vehicle owner. Hence, this becomes the reason why the vehicle owner can transfer the NCB to his/her new vehicle policy.

You can retain the NCB earned on your old or existing vehicle’s insurance policy and get it transferred to a new vehicle’s policy by either selling your old/existing vehicle or transferring it.

For instance, let’s first assume that you have earned 50{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} NCB on your 5-year-old existing vehicle and now, you have sold that vehicle and have bought a new vehicle. In such a case, while selling the vehicle and transferring the vehicle’s insurance policy to the new owner, you can easily retain the NCB earned on your old vehicle’s insurance policy by applying for an ‘NCB transfer certificate’ to the previous insurer. You also need to submit all relevant documents related to the sale of the existing vehicle, etc., immediately after you sell the vehicle to the new owner.

Now, by submitting the NCB transfer certificate to the new insurer (assuming you took a new policy from a different insurer for your new vehicle), you can get the NCB transferred to the new vehicle’s insurance policy and get a huge discount on the premium rates.

However, if you have not planned to buy a new car immediately, you can still claim NCB on your new vehicle if purchased within three years. This is because you can retain your NCB for a maximum of 3 years after the issuance of the NCB transfer certificate by the previous insurer.

Secondly, there can be a situation where you might not want to sell your 5-year-old car but want to get the NCB of that old vehicle to get transferred to the new vehicle in order to reduce your new vehicle’s premium since the policy premium rates for a new vehicle are higher as compared to premium rates offered by insurers for an older vehicle. In such a situation, you will have to transfer your old vehicle to someone else in your family. In other words, you need to change the ownership of the old vehicle to someone else within family members. This is because you cannot use the NCB earned on the old vehicle to get a discount on the premium paid for a new vehicle till you remain the owner of the old vehicle.

Sanjiv Bajaj, Joint Chairman & MD, Bajaj Capital said, “You can transfer the NCB of your private car vehicle policy (provided it’s sold) to a new private car vehicle within the same class for the same owner. However, you cannot switch between the vehicle classes to transfer the NCB.” This means you cannot transfer the NCB accumulated on the two-wheeler policy to a new private car insurance policy.

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