No Claim Bonus (NCB): How to Protect and Maximize It
No Claim Bonus (NCB) is one of the most valuable benefits in motor insurance. Learn how to protect your NCB, maximize discounts up to 50%, and avoid common mistakes that could cost you thousands of rupees.
Table of Contents
What is No Claim Bonus (NCB)?
No Claim Bonus (NCB) is a reward given by insurance companies for not making any claims during your policy period. It's a discount on the own damage premium of your motor insurance policy. The longer you go without making a claim, the higher your NCB percentage becomes.
Key Takeaway: NCB is a reward for safe driving. It is one of the most effective ways to reduce your motor insurance premium and can save you up to 50% on your own damage premium.
Unlike other discounts, NCB is cumulative – it increases with every claim-free year. It is also transferable when you switch insurance companies, making it a valuable asset for every vehicle owner.
How NCB Works
NCB is calculated on the own damage premium of your comprehensive policy, not on the third-party premium. Here's how it works:
- NCB accrues annually: For every claim-free year, your NCB percentage increases.
- NCB is vehicle-specific: It is linked to the vehicle, not the owner. You cannot transfer NCB from one vehicle to another.
- NCB is transferable: You can transfer your NCB when switching insurers.
- NCB has a 90-day grace period: You can renew your policy within 90 days of expiry and retain your NCB.
Important: NCB applies only to the own damage component of your comprehensive policy. If you have only third-party insurance, NCB does not apply.
NCB Calculator & Discount Table
NCB discount increases as you accumulate claim-free years. Here's the complete NCB structure:
| Claim-Free Years | NCB Discount | Effective Savings (on ₹10,000 premium) |
|---|---|---|
| 0-1 year (New Policy) | 0% | ₹0 |
| 1 year | 20% | ₹2,000 |
| 2 consecutive years | 25% | ₹2,500 |
| 3 consecutive years | 35% | ₹3,500 |
| 4 consecutive years | 45% | ₹4,500 |
| 5+ consecutive years | 50% | ₹5,000 |
Example: If your own damage premium is ₹10,000 and you have 5+ claim-free years, you get a ₹5,000 discount. You only pay ₹5,000 for the own damage component of your policy.
How to Protect Your NCB
1. Renew Your Policy on Time
- Renew your policy within 90 days of expiry to retain your NCB.
- After 90 days, your NCB lapses and you start from 0% again.
- Set up reminders or use our free service to track your renewal dates.
2. Avoid Making Small Claims
- For minor damages with repair costs less than your NCB discount, pay out-of-pocket.
- Example: If your NCB discount is ₹5,000 and a claim costs ₹3,000, paying yourself saves you ₹2,000 in the long run.
- Calculate the cost-benefit before filing a claim.
3. Transfer NCB When Switching Insurers
- When switching insurers, obtain an NCB certificate from your current insurer.
- Provide this certificate to the new insurer to transfer your NCB.
- Always check the NCB amount on your new policy document.
Pro Tip: Always request your NCB certificate when renewing or switching insurers. This document is proof of your NCB and can be shared with any insurer.
NCB Transfer When Switching Insurers
One of the greatest benefits of NCB is that it is transferable. Here's how the transfer process works:
- Step 1: Get an NCB certificate from your current insurer before the policy expires.
- Step 2: Share this certificate with your new insurer while purchasing a policy.
- Step 3: The new insurer applies the NCB discount to your new policy.
- Step 4: Verify that the discount is correctly applied on your new policy document.
Caution: Some insurers may not automatically transfer your NCB. Always explicitly mention your NCB during the purchase process and ensure it's reflected in your policy.
Common Mistakes That Kill Your NCB
- ❌ Making a claim for minor damages: Even a small claim resets your NCB to 0%.
- ❌ Letting your policy expire beyond 90 days: You lose your accumulated NCB.
- ❌ Not transferring NCB when switching insurers: You lose your NCB if you don't transfer it.
- ❌ Not verifying NCB on the policy document: Always check if the NCB discount is correctly applied.
- ❌ Assuming NCB applies to third-party insurance: NCB only applies to the own damage component.
NCB Protection Add-On
Many insurers offer an NCB Protection Add-On that allows you to make one claim without losing your NCB. Here's what you need to know:
- How it works: You can make one claim during the policy period, and your NCB remains intact.
- Cost: Typically costs 5-10% of the own damage premium.
- Benefit: Protects your accumulated NCB even if you need to make a claim.
- Best for: High-NCB customers (35% or more) who want to protect their accumulated discount.
Is NCB Protection Worth It?
If you have 45-50% NCB (saving ₹4,500-₹5,000 on a ₹10,000 premium), paying ₹500-₹1,000 for NCB protection is a smart investment. It protects you from losing a much larger discount if you need to file a claim.
FAQs on No Claim Bonus
Q: What is No Claim Bonus (NCB) in motor insurance?
No Claim Bonus (NCB) is a discount offered by insurance companies on the premium of your motor insurance policy for not making any claims during the previous policy year. It is a reward for safe driving and can go up to 50% after 5 consecutive claim-free years.
Q: How is NCB calculated in India?
NCB is calculated based on the number of consecutive claim-free years: 1 year = 20%, 2 years = 25%, 3 years = 35%, 4 years = 45%, 5+ years = 50% discount on the own damage premium of your policy.
Q: Can I transfer my NCB when switching insurers?
Yes. NCB is transferable when you switch insurance companies. You need to obtain an NCB certificate from your previous insurer and provide it to the new insurer when purchasing a policy.
Q: Do I lose my NCB if I make a claim?
Yes, you lose your accumulated NCB for the next renewal if you make a claim. However, if you have NCB protection add-on, you can make one claim without losing your NCB.
Q: Can NCB be transferred between vehicles?
No. NCB is vehicle-specific. You cannot transfer your NCB from one vehicle to another vehicle. Each vehicle has its own NCB record.
Q: How long does NCB last after policy expiry?
You have a grace period of 90 days from the date of policy expiry to renew your policy and retain your NCB. If you renew after 90 days, you lose your accumulated NCB.
Q: Does NCB apply to third-party insurance?
No. NCB applies only to the own damage component of a comprehensive policy. Third-party insurance premiums are fixed by the government and do not get NCB discounts.
Q: Can I get NCB if I never had insurance before?
No. NCB starts from 0% for a new policy. You need to complete at least one claim-free year to earn your first NCB of 20%.
⭐ Protect Your NCB Today
Don't lose your hard-earned No Claim Bonus. Check your insurance expiry date and get the best renewal quotes. Our team helps you retain and maximize your NCB.
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