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No Claim Bonus
What is No Claim Bonus?

In the simplest of terms, No Claim Bonus or NCB is a discount offered by car insurance companies in the premium of the forthcoming year’s insurance, when one has not made any claims in the previous year. This is often regarded as the best way to reduce one’s cost of own-damage premium by up to a whopping 5o percent.

So, how does it really impact your car’s insurance premium? Watch this video!

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The Various Perks of NCB

Apart from the fact that it’s a bonus for not claiming one’s insurance, the No Claim Bonus(NCB) is also a measure of how smartly you use (or drive) your vehicle. That’s why, NCB has a host of perks attached to it:

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It's a reward!

Think of it as a token of appreciation for the vehicle owner for carefully maintaining and running his/her vehicle.

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It’s easily transferable!

Whether you are changing cars or insurers, transferring NCB is easier. There are certain terms and conditions, though.

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It cuts down the premium!

If you decide to trade in your old car for a new one, transferring the NCB could cut down the premium of the new car.

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How Do Discounts In Car Premiums Work?

Insurers offer no-claim bonus with increasing discounts on premium every claim-free year. But how are these discounts calculated? The table below simplifies how NCB is earned:

Details Discount
No claims made in preceding 1 year of insurance 20%
No claims made in preceding 2 year of insurance 25%
No claims made in preceding 3 year of insurance 35%
No claims made in preceding 4 year of insurance 45%
No claims made in preceding 5 year of insurance 50%
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A little note for all of you!

There are some points that need to be thought of while considering a ‘No Claim Bonus’.

  • In certain cases, the insurer might not subject discounts on NCB post five years.
  • On failing to renew the policy, the NCB gained might also get dissolved, which could lead to problems.
  • While discounts are earned over a span of years, they can’t be shared between two policies. It can only be used one policy at a time.
  • If the policy is cancelled before the completion of the policy year, NCB is not earned for that year, and it could go waste.
  • While switching insurers, the NCB retention letter issued must have the exact number of years and the expiry date of the policy.
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Frequently Asked Questions

I am trying to understand what is No Claim Bonus? Please help.

A No-Claims Bonus (NCB) also known as no-claims discount, is a car insurance discount recognized by insurance providers. It's basically a discount on the number of years that you haven't made a claim on your car insurance policy.

So, if you haven’t made a claim on your policy in the previous year, you gain a No-Claim Bonus. The benefit of a NCB usually carries on for five years, but some companies offer further discount for six or more years. Remember that the final amount of discount you receive varies from insurer to insurer.

I was just wondering if I make a claim, how does that affect my NCB?

Even if you make a single claim on your policy, you will lose the entire accumulated NCB %. Hence, it is always suggested that you should avoid making a claim on minor damages so that you can save up on NCB.

In case you were hit by another car and it has been confirmed that you weren’t at fault, your insurance company may be able to reclaim the payout from the other car’s insurer and your NCB may mostly not be affected. This means that you can make a claim on the other driver’s third-party insurance.

In cases where one isn’t able to confirm who is at fault, the insurance companies of both the parties may split the cost of the claims and the NCB of both drivers could be affected and drop to 0%.

If you pay for a new policy with a reduced NCB and are later found not at fault, you can usually get your NCB reinstated and a refund on the extra premium you paid.

What actually happens to my NCB when I change my car or insurance company?

No claims bonuses can usually be transferred to another car, but if you switch your insurance company before the year ends, you won’t be eligible to receive NCB for that year.

Some insurers may provide your proof of NCB in the car insurance renewal letter that they send to you. If it's not there, do make sure you call up your insurer and ask them to send it as it is very important.

If you cancel your policy, you have two years to reuse your NCB. Or else it would expire and you would have to start from scratch.

Will I be able to use my No-Claim Bonus on more than one car? I just bought another car, can I apply it to my second car?

Every policy requires an individual and separate No-Claim Bonus. Hence, you won’t be able to use your No-Claim Bonus on more than one car. You can definitely speak to your insurance broker or directly to your insurance company as sometimes, they do offer an introductory discount on the second vehicle that you own.

What is NCB Protect add-on cover? How is it helpful?

The NCB Protector Add-on cover is like a blessing in disguise. So, if your car has met with an accident due to your fault and you make a claim, your NCB doesn’t drop to 0%. Every insurance company has their own rules regarding how many claims are allowed under the NCB Protect add-on rule.

Just remember one thing that this won’t necessarily stop your premiums from going up after a claim as insurers use your claim history to calculate your premiums. The NCB is calculated at the end. If you have any NCB remaining with you after the claim, it may possibly help to lower your claim but it won’t guarantee a lower premium than the previous year.

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Have more questions to make the most of your no-claim bonus? Talk to an expert!