Insights on No Claim Bonus (NCB) in Car Insurance

Are you someone who’s having difficulty understanding the scope of the ‘No Claim Bonus’ which is offered by your insurance provider? Then this article might be for you. Keep reading to understand what this additional perk entails, the applicable terms and conditions, along with a smart way to protect your eligibility for the same. 

What is NCB?

When we talk about NCB in car insurance, it is a reward given to a policyholder by his/her respective insurance provider, for not making any claims during the tenure of the insurance plan. The benefit is given in the form of a discount, wherein a certain percentage of the premium is slashed for the next policy year, at the time of renewal. This deduction is specifically made on the own-damage component of the comprehensive car insurance plan. 

How is No-claim Bonus Calculated?

Your current or new insurer will provide you with an NCB discount every time you renew your car insurance policy. Usually, the discount is calculated as explained below: 

  • After 1 claim-free year, you’ll get a discount of 20% 
  • After 2 claim-free policy years, you’ll be eligible for an NCB discount of 25%
  • After 3 years of not claiming your car insurance, you’ll get a discount of 35%
  • After 4 claim-free years, you’ll obtain a discount of 45%
  • After 5 years of not making any claims, you’ll get an NCB discount of 50%


However, there’s a clever way out, which allows you to retain your NCB despite having made some inevitable claims. Curious? Keep reading through the article to know more!

5 things to note about NCB 

NCB comes with its own share of terms and conditions, which you, as a potential insurance buyer, should be aware of.  


NCB can be transferred, but not shared

After your car insurance plan lapses, you have the option to switch to a different insurer. When you do that, the No Claim Bonus given by your current insurance firm can be transferred to your new insurer, entitling you to obtain the same NCB discount. This transferability also holds true during times when you choose to sell off your old car to purchase a new one. This is because the NCB is retained by the policyholder, not the insured vehicle or the insurance provider. Moreover, in case of the policyholder’s unfortunate demise, the perk can be transferred to his/her legal heir, when he/she inherits the vehicle. 


To retain this benefit, all you have to do is procure an NCB Reservation Letter from your current insurer. This certificate stays valid for a period of 3 years from the date of issuance. However, please note that your NCB benefit cannot be shared between two policies. For instance, say you own two policies, one for your car and one for your two-wheeler. In such a scenario, the NCB benefit from your car insurance cannot be extended and made applicable to your two-wheeler insurance premiums whatsoever. 

NCB comes with a waiting period of one year

As the very concept of an NCB discount is based on the concept of not filing claims for one policy year, it goes without saying that you’ll not be eligible for this benefit for one year post purchasing your first car insurance policy. However, this is not the case if you switch insurers, as you’ll still be able to transfer the NCB discount, as explained above. 

NCB is solely applicable to comprehensive covers

This discount is not available for OD plans or third-party covers, as the perk is solely offered to customers who opt for a comprehensive car insurance policy. In India, the risks of vehicular damage are significantly amplified by heavy traffic and extreme weather conditions. Hence, in the long run, it is much more beneficial to go for comprehensive car insurance, as its exhaustive coverage will help you tackle such hefty yet unavoidable expenses. As the costs associated with engine repair tend to be on the higher side of the spectrum, you can evade such weighty expenditures by opting for an engine protection cover while you’re at it, too!


A Smart Way To Protect Your NCB 

The ‘No Claim Bonus Protector’ rider helps you shield your NCB discount, despite having filed an insurance claim in the previous policy year. This add-on is especially useful during times when you’re forced to make a claim due to some unavoidable adversities, but still wish to stay eligible for the sizable discount.