Understanding the ‘No Claims Discounts’ in Vehicle Insurance

No Claims Discounts’ in Vehicle Insurance

Even if you are the owner of a UAE vehicle insurance policy, you may not have clear idea on the ‘No Claims Discount’ aka ‘No Claims Bonus (NCB).’ This is a discount offered to a policyholder on the vehicle insurance premium only at the time of renewal. You are eligible for this reward only if you have a claim-free record during the preceding policy term. The rate of this discount increases each year if you have an accident-free and no-claim record.

The benefit of no claims discount is an add-on cover offered by some of the insurance providers in the UAE. It offers quite a motivation to save on the premium at the time of vehicle insurance renewal.

We explain how the NCB works and how much savings it presents you.

How is percentage of discount decided?

– A no-claims bonus accumulates over the years that you go through without filing a claim on your policy.

– Depending on the vehicle insurance providers, the discount on premiums can range between 10-50% while renewing the policy. The UAE Insurance Authority guarantees a discount of 10, 15 and 20 % for a no-claim record of one, two and three years respectively. Some insurers even offer 50 % percent discount to individuals with a 5-year record. This is quite a substantial amount of savings.

– The range of discount depends on your risk profile which includes your age, occupation, and lifestyle among many others.

Does filing a claim eliminate NCB?

– In contrast to the widespread belief, your ‘no claims discount’ will not drop to zero if you make a claim in the previous year. Insurers make use of their own assessment to fix the discount in case there is a claim filed.

– One single accident does not end up eliminating your rights to file a ‘no claims bonus’. It should be noted that this feature is valid only if the accident is not your mistake, as shown in a police report.

– There is no one fix formula and the clause may vary. It is recommended to inquire with your UAE vehicle insurance provider regarding the claim limit eligibility criteria.

Can we transfer NCB?

– NCB is linked with the driver instead of the vehicle. And can be easily transferred when you change your insurance provider or your vehicle.

– The insurer will provide you with a ‘no claims discount’ certificate, free of any costs in accordance with the regulations set by the UAE Insurance Authority.

– Your existing NCB can be applied to another car too if the primary driver is the same across both the vehicles.

Remember, every insurance company rules regarding the NCB varies. It is best for you to find out the details with your vehicle insurance provider so that you can opt for most appropriate policy.

Still have some concerns on the No Claims Bonus? or want to know the discount percentage you are eligible for based your past record of claim-free years? Contact our insurance advisors and they will be happy to answer all your enquiries.