What is No Claim Bonus (NCB)?
NCB is a reward from your insurer for not making any claims during a policy year. For every claim-free year, you earn a progressively higher discount on your Own Damage (OD) premium at renewal. It's essentially your insurer rewarding you for being a safe, careful driver.
NCB applies only to the Own Damage component of comprehensive insurance — not on third party premium (which is fixed by IRDAI).
How Much Can You Save with NCB?
| Claim-Free Years | NCB Discount | Saving on ₹10,000 OD Premium |
|---|---|---|
| 1 year | 20% | ₹2,000/year |
| 2 years | 25% | ₹2,500/year |
| 3 years | 35% | ₹3,500/year |
| 4 years | 45% | ₹4,500/year |
| 5+ years | 50% | ₹5,000/year |
Over 5 claim-free years on a ₹10,000 OD premium, the total NCB savings add up to approximately ₹17,500 in cumulative discounts. This makes NCB the single most valuable long-term benefit in motor insurance.
Rohit in Pune has a 5-year-old Honda City with a base OD premium of ₹9,800. After 5 claim-free years, his NCB is 50%, meaning he pays only ₹4,900 in OD premium — saving ₹4,900 every single year.
Key NCB Rules You Must Know
- NCB belongs to the owner, not the vehicle. If you sell your car, your NCB stays with you and can be used on your next car.
- Making a claim resets NCB to 0%. Even one small claim wipes out all accumulated NCB unless you have NCB Protection add-on.
- Policy must be renewed within 90 days of expiry to retain NCB. After 90 days, it's gone forever.
- NCB is only on OD premium. It does not apply to third party or personal accident components.
- Maximum NCB is 50% — this is capped by IRDAI regardless of how many claim-free years you have beyond 5.
How to Protect Your NCB
Option 1: NCB Protection Add-on
This add-on, available with most comprehensive policies, allows you to make one specified claim per year without losing your NCB. It typically costs 5-8% of the OD premium — so roughly ₹400-800/year on a ₹10,000 premium. Strongly recommended if your NCB is 35% or above.
Option 2: Pay Small Claims Out of Pocket
If the claim amount is small (under ₹15,000-20,000), it may make more financial sense to pay from your pocket and preserve your NCB. Calculate whether the claim amount is less than the NCB discount you'd lose — if yes, don't claim.
Option 3: Renew on Time, Every Time
Set a reminder 30 days before your policy expiry. Never let it lapse beyond 90 days. This is the single most important rule to protect your NCB.
How to Transfer NCB to a New Car
When you sell your old car and buy a new one, you can transfer your accumulated NCB. Here's how:
- Get an NCB Certificate from your current insurer (valid for 3 years)
- When insuring your new vehicle, submit this certificate to the new insurer
- Your NCB discount will be applied on the new vehicle's OD premium
NCB cannot be transferred between two simultaneously owned vehicles or transferred to another person. It strictly belongs to the individual policyholder and moves with them to their new vehicle.
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