How to Calculate No Claim Bonus (NCB) in Car Insurance?
When you renew your car insurance policy, you may notice a discount on your premium called the No Claim Bonus.
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How Does No Claim Bonus in Car Insurance Work?
A No Claim Bonus in car insurance applies when you do not file any claim in the policy year and your insurer awards you with a reduced premium on your policy renewal.
- NCB applies only to the own-damage (OD) premium.
- It does not apply on the third-party liability cover.
- The No claim bonus discount increases with each consecutive claim-free year.
How is No Claim Bonus Calculated in Car Insurance?
The calculation of NCB discount is straightforward. The longer you avoid raising claims, the more discount you will get on your premium during renewal. In India, most car insurance companies have the following NCB slabs through which they determine premium discounts:
| Number of Claim-free Years |
No Claim Bonus (NCB) Percentage |
| 1 Year |
20% |
| 2 Years |
25% |
| 3 Years |
35% |
| 4 Years |
45% |
| 5+ Years |
50% (maximum) |
Here's the No Claim Bonus calculation:
For example, the own-damage premium for your car is Rs. 20,000. Now,
- After 1 claim-free year, a discount 20% on Rs. 20,000 will be applicable, i.e., Rs. 4,000. So, your premium will be Rs 16,000.
- Similarly, after 2 claim-free years, your NCB will be 25%, which will lower your renewal premium to Rs. 15,000.
- And, after 3 claim-free years, the premium will be 35% less, i.e., Rs. 10,000.
This way, by driving safe and not making claims, you can reduce your car insurance renewal premium by 50% over the period of 5 claim-free years.
Why is No Claim Bonus Important?
The No claim bonus is an important add on in four-wheeler insurance that car owners should opt for. Here's why:
- Significant Savings: You can get up to 50% discount on your own-damage premium.
- Promotes Safe Driving: Insurers reward you for following safe driving behaviour.
- Easily Transferable: NCB moves with you, whether you buy a new car or change your insurer.
In short, the No Claim Bonus in car insurance is one of the most practical features to reduce premiums without compromising on coverage.
How to Transfer Your No Claim Bonus?
The NCB bonus is linked to the policyholder, not the car. If you sell your old car and buy a new one, you can transfer your accumulated NCB to your new car insurance policy. Moreover, if you change your insurer, you can carry forward your no claim bonus to the new insurer by providing an NCB certificate to your new insurer.
Also Read: Know About NCB Certificate in Car Insurance
How to Protect NCB in Car Insurance?
To avoid losing your NCB benefits when you raise a claim, you can opt for an NCB Protector add-on with your comprehensive or own damage car insurance plan at a slightly additional premium. WIth this add-on,
- You can raise a limited number of claims (as specified in the policy document) without losing your NCB.
- It is especially useful for small repairs like glass replacement, bumper scratches, or dents.
When Do You Lose Your No Claim Bonus?
There are certain situations in which you can lose your No Claim Bonus in insurance:
- Raise a Claim: Even if you make a small claim against your car insurance, it resets your NCB to zero, unless you have the NCB protector add-on cover.
- Coverage Lapse: If you fail to renew your car insurance within 90 days of expiry, NCB is forfeited.
- Any False Declaration: If you misrepresent or hide your claim history at the time of switching insurers, it can also void your NCB benefits.
Avoid filing claims for minor scratches or dents. Paying for these repairs from your pocket is cheaper than losing years of your accumulated NCB.
In Conclusion,
The No Claim Bonus allows you to save a significant amount on your premium amount when you renew car insurance. Drive responsibly, avoid filing minor or unnecessary claims, and protect your accumulated bonus by opting for an NCB Protector add-on. This will help you maximise your NCB benefits at the time of renewals.
