How does No Claim Certificate in Car Insurance work?

No Claim Bonus or no claim certificate is a benefit provided by the car insurance company for not making any insurance claim in the previous insurance policy tenure. A certain amount is reduced as a discount by the insurance company during the time of renewal with no claim discount. The percentage of discount increases year after year and if the policyholder does not claim on the car insurance policy and is not subject to any car accidents, the insurance company issues no claim certificate stating that the policyholder has not made an insurance claim in the previous year.

Make Savings with no claim bonus

A guaranteed discount of 10%, 15% & 20% will be provided by no claim discount for 1, 2 and 3 years respectively. The discounts are warranted by the UAE Insurance Authority under decision 41 of 2017. Some insurance companies provide a discount until 50% to the car insurance policy holders who have aggregated five years of no claim records. The details of no claim bonus can be obtained from the insurance renewal notice at the insurance company.

Can you make a claim and still protect your no claim bonus?

You can make a claim on insurance and still protect your discount. It does not risk your discount in the next following year. The discount remains protected even if you make a claim on insurance. The condition for this protection is that the accident should not be your mistake. It should be written and shown by a legal authority. Some insurance companies allow multiple claims upto a certain limit of amount while some insurance companies limit to certain number of claims. It gives protection to your discount and it does not cover the premium. The insurance company can increase the premium and the rate of discount may continue to be constant. 

Click here for No Claim Bonus on car insurance in UAE

How to get No Claim Certificate?

When the insurance policyholder purchases the insurance policy, a no claim bonus certificate is provided. It depends on the policyholder if he makes any claims or not during the tenure. If there are no claims made during the whole year then the policyholder is eligible to get the benefit. If any claims are made in the year then no claim benefit will not be provided to the policyholder. The no claim certificate is provided by the insurance company according to the rule given by the UAE Insurance Authority.   

When you will lose your No Claim Bonus?

If you cancel the insurance prior to the expiration of the insurance policy then the insurance policyholder will lose the benefits earned during the year. If a policyholder wants to change the insurance company then it can be done by transferring the no claim bonus to the new insurance company. 

Transfer of No Claim Discount 

This discount belongs to the car driver & it does not belong to the car. The insurance policyholder can transfer no claim discount to any other car. It can also be transferred to another insurance company. If you are transferring insurance to another insurance company then you need a certificate from the UAE Insurance Authority called “No Claim Certificate”. This rule makes the insurance company provide a no claim certificate without charging any expenses to the insurance policyholder. The purpose of this certificate is to certify that no claims were made in the previous years. Once the insurance policy holder has this certificate he can transfer insurance from one company to another company. 

Click here to know Expired Car Insurance Renewal

No Claim Bonus is available only on policy renewal

No claim bonus as the name indicates it is a reward which is available only on renewal of policy. The reward or the discount is offered between 10%-20%, some companies provide upto 50%. No claim bonus has to be earned and policyholders cannot claim any right over this discount amount. It is important to note that no claim bonus cannot be claimed when you purchase your first insurance policy because you did not have any insurance policy in the previous year. This discount increases every year upto 50% if you do not make any claims until maximum five years. 

What happens when you make Claim on Car Insurance?

When you make a claim on insurance you get the compensation for the loss which is covered according to the insurance policy. The insurance company does a validation of your claim and either pays or denies your claim. When you take an insurance claim, you will not receive a ‘no claim discount’ at the time of renewal. There is no universal formula for calculating the insurance losses. The insurance company provides the insurance claim to the policyholder. Every small claim is accounted for by the insurance company. Pay for the small expenses out of your pocket if you can manage them. 

Important Points to Remember

  • No claim bonus can be claimed only during the time of policy renewal. 
  • No claim certificate is issued to car drivers and not on the car.  
  • The discount can be transferred if you change your car.
  • It is a reward given for good driving.
  • No matter which type of car you have, this bonus is offered provided you earn it. 
  • You can make savings with no claim bonus. 

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.






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