No Claim Bonus

No Claim Bonus (NCB) is a discount on your motor insurance premium that you earn for every year you do not make a claim. The bonus accumulates over consecutive claim-free years and can reduce your premium by up to 50%. NCB is one of the most valuable benefits in motor insurance as it directly reduces the cost of renewing your policy each year.

What Is No Claim Bonus?

NCB is a reward given by the insurer for driving responsibly and not filing claims. IRDAI has standardised NCB rates for all motor insurers:

| Claim-Free Years | NCB Discount |
|—————–|————-|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5+ years | 50% |

The discount applies to the Own Damage (OD) component of the premium, not the third-party premium.

NCB Belongs to the Policyholder, Not the Vehicle

If you sell your car and buy a new one, your NCB follows you. You can transfer the accumulated bonus to your new vehicle’s insurance policy. NCB is linked to the policyholder, not the car.

Impact of a Claim on NCB

If you file a claim in any year, your NCB resets to zero. For example, if you had a 35% NCB and made one claim, you start from 0% NCB in the next year. This is why many car owners choose to pay small repair bills out of pocket rather than file a claim, preserving the NCB.

NCB Protect Add-On

NCB Protect is an optional add-on that preserves your NCB even if you make one claim during the year. It is particularly useful if you have 40% to 50% NCB that you do not want to lose due to a minor accident.

NCB on Policy Renewal

NCB is valid for 90 days after policy expiry. If you renew within 90 days of the policy lapsing, the insurer credits your existing NCB. If you delay beyond 90 days, the NCB is lost and you start fresh.

Practical Example

Sonal has driven claim-free for 5 years and has 50% NCB. Her OD premium this year would have been Rs 12,000. With 50% NCB, she pays Rs 6,000. A minor claim this year would reset NCB to 0%. The difference in premium next year would be approximately Rs 6,000. For claims smaller than Rs 6,000 in repair cost, she is better off paying out of pocket.

Key Takeaways

– NCB is a discount on the own damage premium for each consecutive claim-free year, up to 50%
– NCB belongs to the policyholder, not the vehicle, and can be transferred when buying a new car
– A single claim resets NCB to zero; the NCB Protect add-on prevents this
– For minor repairs, compare the repair cost with the NCB value before deciding to file a claim
– Renew your policy within 90 days of expiry to retain your accumulated NCB