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No Claim Bonus (NCB) in Car Insurance

No claim bonus (NCB) is a discount, given by an insurer to a policyholder for making no claims during the policy term. NCB can be accumulated over years and the discount ranges from 20% to 50% on the own damage premium. No claim bonus is offered to a customer even if he changes his vehicle, as NCB can be transferred to the new vehicle he purchases.

How does NCB work?

No claim bonus increases every year as per the following table:

All Types of Vehicles

% of Discount on OD* premium

No claims have been made or are pending at the end of the year or at the time of policy renewal


No claims have been made or are pending at the end of the year or at the time of policy renewal


No claims have been made or are pending at the end of the year or at the time of policy renewal


No claims have been made or are pending at the end of the year or at the time of policy renewal


No claims have been made or are pending at the end of the year or at the time of policy renewal


*OD= Own Damage


On first renewal, a car with IDV (Insured Declared Value) of Rs. 4 lakhs has own damage premium of Rs. 12,000. The policyholder is entitled to 20% discount if he has not made a claim. So, his premium would be Rs. 9,600. He clearly saves Rs. 2,400 by not making a claim.

The money saved on OD (Own Damage) premium keeps increasing every year with the discount increasing annually.

When is NCB terminated?

  • If a claim is made during a policy year, no NCB will be given in the next year.
  • If the policy is not renewed within 90 days from the date of expiry of your existing policy.

More about NCB:

  • NCB can be transferred from one vehicle to another as long as the policyholder is the same.
  • NCB is transferable from one insurer to another.

No Claim Bonus for commercial vehicles

Business plans and fleet vehicles don't generally give you a chance to develop NCB, but some insurers consider your experience driving an organization car while figuring your premium.

If you have insured your car for "social, residential and delight" purposes, and in addition to work, you presumably can build NCB.

Validity of Proof of No Claims

The proof of NCB is generally valid for two years. Therefore, if a policyholder is off the road for any reason or don’t have his own policy for more than two years, he will have to start from scratch the next time he takes out cover.

NCB if the vehicle is in an accident or stolen

In case of an accident, unless the insurer recovers the majority of its expenses from the other party, for example, the driver who might be at fault, then a bit of or the entire no claims bonus will be lost. If the event involves a third party and the fault of the driver cannot be determined, then the expenses will be divided into two, and the no claims bonus will be affected.

The same applies if the vehicle is stolen, as the insurer will be not able to recover its expenses from the other company, and the no claims bonus will be at risk.

Can no claims bonus be protected?

By paying a small fee to the insurer, the full discount will remain if a claim is made. Probably, this expense will not be exactly the discount accessible after five years of no claims, despite the fact that there may be breaking points regarding how frequently the insurance can be utilized and two claims or more each year may still have an impact. Paying for no claims bonus protection does not keep the cost of the policy from increasing later on.

Mirrored No Claims Bonus

The term no-claim bonus is used when an individual who has already gained a bonus on an existing car insurance policy, now decides to purchase a vehicle for commercial purposes.

No claims bonus in case of a named driver

A couple of car insurance providing companies permit named drivers to acquire a no claim discount. This is splendid that if in the long run, the named driver wants to go onto their own insurance policy approach later, in light of the fact that as a rule, a standard car insurance policy doesn't permit named drivers to win their own no claims history.

No Claim Bonus Add-on

Since no claims bonus is offered as a reward to a policyholder who doesn't have any motor insurance claim in the earlier years, even a little claim can wipe out the full reward conveying it down to zero. Car insurance agencies, however, offer their clients the alternatives of picking a no claim bonus maintenance protection add-on cover, also known as NCB maintenance add-on. Such extra covers offer an assurance on NCB up to a specific limit permitting NCB guarantee regardless of the possibility that cases have been made till a particular predetermined limit in the earlier year.

No Claim Bonus Transfer

Since No Claim Bonus is offered to a policyholder and not to a vehicle, it can be moved for the sake of the present vehicle proprietor whom he or she can utilize while buying protection against any new vehicle.

No Claim Bonus if insurance is shifted to a different insurer

In case the insurer changes insurance provider, the new insurance company permits the exchange of no claim bonus in most cases. In the event of any questions over the qualification of the No Claim Bonus certificate, the new insurer may look for a revelation that the no claim reward is honest to goodness and no claim was asked for from the previous insurer by the policyholder.