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No Claim Bonus (NCB) in Car Insurance

No Claim Bonus (NCB) is a discount offered on Own Damage (OD) premium for not claiming on your car insurance during the policy period. This means that for each claim-free year, the No Claim Bonus can be earned starting from 20% and go upto a maximum of 50% over a span of 5 years. This is often regarded as the best way to reduce one’s cost of Own Damage premium at the time of renewal.

The Various Perks of NCB

By now, you do know that NCB is a bonus for every claim-free year. Additionally, 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. What are they? Let’s find out


Think of it as a token of appreciation that you receive for carefully maintaining and running your vehicle.

Easily transferable!

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

Cuts down the premium

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

How does No Claim Bonus Work?

No claim bonus can be initiated when the policyholder has not filed a claim in the past one year. The rate of discount for Own Damage (OD) increases at the rate of 5% every year, along with the increase in premium rates.

For instance, if a vehicle with an Insured Declared Value (IDV) of Rs.5 lakhs and premium amount of Rs.15,000 annually has not initiated a claim in the past year, the policyholder will be eligible for a No Claim Bonus during the time of renewal. Therefore, a discount of 25% is applicable on an annual premium of Rs.15,000 when a claim has not been made in the past one year. This implies that the owner of the vehicle has to pay Rs.11,250, taking into account the 25% discount that he/she will be eligible for.

No Claim Bonus Add-on

No claim bonus add-on is an optional feature that can be attached to your car insurance policy to protect the No Claim Bonus even if you have to make a claim.

With this add-on, you can go on to claim your No Claim Bonus discount of your accumulated percentage slab even if you have made a claim. This add-on covers a pre-defined number of claims that can be made by the car owner without affecting the No Claim Bonus at all.

No Claim Bonus add-on cover is suitable for people who drive their car safely and follow the rules and regulations and don't want to lose out on their accumulated No Claim Bonus due to an unfortunate rare accidental claim.

How is No Claim Bonus Calculated?

Vehicles of over and above 5 years of age are eligible for up to 50% discount on the premium as long as the owner does not make a claim.

These discounts are availed under “No Claim Bonus” when you opt a comprehensive car insurance policy.

But, remember your NCB immediately drops down to zero, if you file a claim during any policy period.

Let’s say for example, Priya and Mala both purchased a Hyundai Car with the same vehicle model. They also buy a same comprehensive policy from the same insurer. Priya doesn't make any claim in the 1st policy period, for which she gets rewarded a 20% NCB. Mala however, makes a claim in the 1st year and is not eligible for the NCB.

1st year premiumRs.12,000Rs.12,000
2nd year PremiumRs.10,000Rs.10,000
After applying (20% NCB) for 2nd year Rs.8,000NCB is 0 and so the total premium payable would be Rs.10,000

When is NCB terminated?

No Claim Bonus can be terminated when either of these situations arises:

  • When a claim had been made in a policy year, the policyholder will not be eligible for No Claim Bonus in the next annual year

  • When the policy has not been renewed within 90 days from the expiration of the existing policy

Impact of NCB Discount on Your Premium Calculation

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

No claims made in preceding 1 year of insurance20%
No claims made in preceding 2 years of insurance25%
No claims made in preceding 3 years of insurance35%
No claims made in preceding 4 years of insurance45%
No claims made in preceding 5 years of insurance50%

Remember! If your motive is to cut the cost of premium, then it is advisable to drive carefully and make no claims. Thus, making the most of your NCB discount.

Still confused? Watch this video!

No Claim Bonus Transfer

A No Claim Bonus is a discount offered by the insurance company on own damage premiums to the policyholder. NCB belongs to the policyholder/car owner and not to the car. So, No Claim Bonus transfer means, when you buy or sell an old car or renew your car insurance from another insurance provider, you are still eligible to avail this discount provided you haven't made any claims in the previous policy year.

NCB is cumulative in nature. And almost all the car insurance companies allow No Claim Bonus transfer, when you renew car insurance from them instead of your previous insurer.

A little note for all of you!

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

  • On failing to renew the policy, the NCB gained will get dissolved after 90 days from the date of expiry, 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 transferring NCB from the old car to a new car, you would require an NCB retention letter.

More Info on NCB in Car Insurance

I am trying to understand what is No Claim Bonus? How does it impact my premium? Please help.

A No-Claims Bonus (NCB) also known as no-claims discount, is a 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.

In a way, having an accumulated NCB discount does help you save up on premiums.

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.

Imagine you were hit by another car and it has been confirmed that you weren’t at fault. In such case, our 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. Here 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?

NCB 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. 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. This is because 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 then again it won’t guarantee a lower premium than the previous year.

How to get no claim bonus certificate?

You can send a copy of Registration Transfer Form (RTO Form 29) along with the previous year car insurance policy details to the insurer to get a no claim bonus retention certificate. This certificate can be produced to get the discount on own damage car insurance premium when you purchase another vehicle.

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