NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Non-Life Insurance Products
Which of the following best describes a 'no claim bonus' (NCB) in a motor own-damage policy?
A no claim bonus is a discount on the own-damage premium at renewal given when no claim was made in the previous policy year. It rewards claim-free driving, can accumulate over consecutive years, and does not apply to the regulated third-party premium.
- AA discount on the own-damage premium at renewal for a claim-free yearCorrect
- BAn extra payout given when a claim is made
- CA discount on the third-party premium for claim-free years
- DA refund of the premium if the vehicle is sold
Explanation
NCB is a premium discount on the own-damage portion at renewal if no claim was made in the previous policy year, and it accumulates with consecutive claim-free years. It does not apply to the third-party premium, which is fixed by the regulator, and it is not a payout.
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