When it comes to car insurance in India, the No Claim Bonus (NCB) is one of the most valuable benefits for policyholders. It rewards careful drivers who go an entire policy year without making a claim. Over time, the NCB can significantly reduce your insurance premiums, making it an essential feature to understand and manage wisely. In this article, we’ll break down what NCB is, how it works, how much you can save, and how to retain it during policy renewals and claims.
What is No Claim Bonus (NCB)?
No Claim Bonus is a discount offered by insurance companies on the premium of your car insurance policy for each claim-free year. It applies only to the own damage component of a comprehensive policy, not to third-party premiums.
- Who gets it?
Car owners who do not raise any claims during the policy term. - How is it applied?
As a percentage discount on the renewal premium. - Is it transferable?
Yes, NCB belongs to the policyholder, not the vehicle, and can be transferred to a new vehicle or insurer.
NCB Discount Slabs
Here’s how the No Claim Bonus accumulates over the years:
| Claim-Free Year | NCB Discount (%) |
|---|---|
| After 1 year | 20% |
| After 2 years | 25% |
| After 3 years | 35% |
| After 4 years | 45% |
| After 5+ years | 50% |
Pro Tip: 50% is the maximum NCB you can earn. If you maintain a claim-free record, this discount is retained year after year.
How NCB Saves You Money
The biggest advantage of NCB is the savings on your premium. For example:
- Own Damage Premium: ₹10,000
- NCB (20% after 1 year): ₹2,000 discount
- NCB (50% after 5 years): ₹5,000 discount
Over multiple years, maintaining your NCB can save you a significant amount on insurance costs.
Example Scenario:
If you don’t raise any claim for 5 years, and your average own damage premium is ₹10,000 per year, you could save up to ₹15,000–₹20,000 in total with NCB.
How to Retain NCB
1. Avoid Small Claims
If the damage repair cost is less than your NCB benefit, it might be smarter to pay out of pocket and retain your bonus.
2. NCB Protection Add-On
Some insurers offer NCB protection as an add-on cover. It allows you to make one or more claims in a year without losing your accumulated NCB.
3. Transfer NCB to New Car
Selling your old car? You can transfer your NCB to the new car’s insurance policy. Request an NCB retention certificate from your insurer.
4. Renew Policy on Time
You have a grace period of 90 days after your policy expiry to renew and retain your NCB. If you miss this window, the NCB is reset to zero.
Pro Tip: Always check if your new insurer accepts NCB from your previous company—most do.
What Happens If You Make a Claim?
If you make even a single claim during the policy year (without an NCB protection cover), you lose the entire bonus and your NCB resets to 0%.
- Before Claim: NCB = 35%
- After Claim: NCB = 0%
- Next Year’s Premium: Increases, as the discount is removed
That’s why many policyholders choose to pay for minor damages themselves rather than file a claim.
Transferability of NCB
Your NCB is attached to your driving record—not the vehicle. This means:
- You can switch insurers and retain your NCB.
- You can sell your old car and use the NCB on your new car.
- You need an NCB certificate from your old insurer to avail it on the new policy.
Pro Tip: Keep a copy of your previous policy and NCB certificate to ensure smooth transfer.
Myths About NCB
Myth 1: NCB applies to the entire premium.
Fact: It only applies to the own damage portion, not the third-party liability.
Myth 2: NCB cannot be transferred to another car or insurer.
Fact: NCB is fully transferable between cars and insurance companies.
Myth 3: Buying a used car gives you the seller’s NCB.
Fact: NCB is non-transferable between individuals; it stays with the policyholder.
Final Thoughts
No Claim Bonus is a powerful reward for safe and responsible driving. By avoiding unnecessary claims and renewing your policy on time, you can accumulate up to 50% discount on your own damage premium. If you’re planning to switch insurers or buy a new car, make sure you carry over your NCB—it’s your earned discount and can lead to major savings.
Consider opting for an NCB protection add-on if you want to preserve your discount even in case of minor claims. Ultimately, understanding and managing your NCB wisely can lead to better insurance value and long-term financial benefits.