Can NCB be transferred to sandbox motor policy?



No claim bonus (NCB) is a benefit that accrues to the insured or policyholder if no claims are made in a comprehensive or standard motor insurance policy during the policy period. The policy period for a regular insurance cover is one year. However, if you want to switch to a motor insurance policy issued under the regulatory sandbox guidelines, can you transfer the NCB?Under the regulatory sandbox guidelines, many insurers have come up with new motor insurance policies based on the concept of how much you actually drive your car. These types of motor insurance policies can help you save on premiums significantly. However, the policies issued under these regulations have some limitations. One of them being that not all sandbox policies allow the transfer of NCB, only some do. How you earn NCB on the policy premiumNCB is actually a discount on the renewal premium for the own damage (OD) section of the policy. A policyholder will get this bonus for each claim-free year. NCB starts from 20 per cent at the end of the first ‘no claim’ year of the policy and increases up to a maximum of 50 per cent over a claim-free period of five years. It is a discount that can be claimed on the OD portion of the insurance premium payable on the renewal of the vehicle insurance policy by the insured. If, at the time of renewal of policy you shift to a different insurer, then you can transfer and get the NCB discount on the policy purchased from the new insurer. NCB can only be earned on the OD portion of insurance therefore you cannot earn it on third-party (TP) only insurance policies.Naval Goel, Founder and CEO, PolicyX.com said, “You can transfer the full benefits of NCB when you shift your motor insurance policy from one insurance company to another. Also, in the case of policies which cover vehicle for a shorter/limited policy tenure, you can transfer the NCB benefit. However, transferring NCB to a floater-based motor policy can be complex.”Currently, two insurance companies offer motor covers under the sandbox guidelines: Bharti AXA General Insurance has a pay-as-use-you-drive motor cover; Edelweiss General Insurance has a pay-as-you-use insurance policy. Here is a look at what happens to the NCB portion of your existing insurance policies if you switch to one of these motor covers.Bharti AXA General Insurance’s pay-as-you-drive motor insurance policyRakesh Goyal, Director, Probus Insurance, an online insurance broking firm, said, “If there is an existing NCB with your current motor insurance policy it can be claimed for a discount on the premium for the OD portion of the pay-as-you-drive private car insurance policy.”The pay-as-you-drive insurance policy will be a combination of both, OD and TP policies, wherein the TP premium will be decided as per the regulatory norms while the OD premium will be calculated based on how many kilometres you intend to drive your car during a given period. When you buy this policy, the vehicle’s current odometer reading is noted and after that, you get the option to choose the slab as per the usage. Currently, the insurer has come up with three slabs — 2,500 km, 5,000 km and 7,500 km — under the pay-as-you-drive motor insurance policy. Click here to know more: Pay as you drive or pay as you use motor policy?Edelweiss General Insurance pay-as-you-use motor insurance policySince this is a floater policy where you can insure up to three vehicles under one policy, you might not be able to transfer the NCB earned on a traditional motor insurance policy bought for one car. Shanai Ghosh, Executive Director & CEO, Edelweiss General Insurance, said that the pay-as-you-use motor insurance policy is a driver-based, multi-vehicle, floater policy that covers damages to the vehicle driven by the insured. In traditional motor policies, NCB is given for each vehicle’s insurance policy is subject to zero insurance claim during the year. “Transferring NCBs from multiple policies to a single pay-as-you-use motor insurance policy would be extremely complex for the insured to monitor and equally difficult to administer,” explained Ghosh.Ghosh added, “We have therefore factored the effect of NCBs while arriving at the premium rates for the policy. The rates are fixed in such a manner, that there is saving of around 30-45 per cent for a customer, on an average, with normal car usage. Having said so, we are recording the NCBs declared by customers when they add their first vehicle within the policy. If there is no claim throughout the policy period, which is a year minimum, we will issue an NCB reserving letter to the client, should they wish to shift to a traditional motor policy, on renewal.”The pay-as-you-use motor insurance policy is a floater standalone OD policy for private cars. In such a policy, the insurance premium will be calculated based on the age and experience of the driver. The policy can help you save money on premiums and provide convenience as you will have to pay premiums only for the days you use the vehicle.Since it is a standalone OD policy and if you are insuring three vehicles under one policy, then make sure you buy third-party insurance for your cars separately, either from the same insurer or different insurer. Those private car owners who already have bundled motor insurance policies (1-year OD + 3-years TP) can buy this pay-as-you-use motor insurance standalone OD policy at the time of renewal. This is because they already will have an active long-term third-party insurance for their vehicle.Points to noteYou cannot switch vehicle types to transfer the NCB, that is, you cannot transfer the NCB earned on a two-wheeler policy to a car’s insurance policy.You can claim the NCB discount only if the policy gets renewed from the same insurer or new policy is bought from different insurer within 90 days of the expiry date of the policy and no claim was made in the entire previous policy year. Also read: How to use NCB of old car insurance to reduce new car policy premium



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