If you own a car or bike, you’ve probably heard the term No Claim Bonus, commonly called NCB. Many people know that NCB reduces insurance premiums, but very few truly understand how it works.
This guide explains NCB in the simplest possible way, with real examples, benefits, and common mistakes to avoid.
What Is No Claim Bonus (NCB)?
No Claim Bonus (NCB) is a reward given by your insurance company for driving safely and not making any claims during the policy year.
In simple words: If you don’t file any insurance claim in a year, your next year’s premium becomes cheaper.
It applies only on the Own Damage (OD) premium, not on Third-Party insurance.
How Much Discount Can You Get?
NCB increases every claim-free year. Here is the standard NCB structure in India:
| Claim-Free Years | NCB Discount |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5 years | 50% |
Simple Example
Suppose your car’s Own Damage premium is ₹10,000.
- Year 1 No Claim: You get 20% off → Premium = ₹8,000
- Year 3 No Claim: You get 35% off → Premium = ₹6,500
- Year 5 No Claim: You get 50% off → Premium = ₹5,000
When Do You Lose Your NCB?
NCB is given only when no claim is made. You may lose your NCB completely in these situations:
- Filing even one claim in a year.
- Policy renewal after expiry (usually after 90 days grace period).
- Not transferring NCB when selling or buying a new car.
However, there is a solution to protect it — NCB Protection Add-On. This allows you to keep your NCB even if you make a claim, which is useful when repair costs are high.
NCB Is Linked to You, Not Your Car
This is a very important point that people often misunderstand: NCB belongs to the policyholder, not the vehicle.
So when you sell your old car and buy a new one, you can transfer your accumulated NCB to the new vehicle and continue enjoying the discount.
When Should You Avoid Making a Claim?
Many people lose NCB because they claim for small damages like a broken mirror or minor dent. A simple rule helps:
If the repair cost is less than or close to your (Deductible + NCB Loss), avoid claiming.
This helps you save more money in the long run.
Common Myths About NCB (Busted!)
Myth
“NCB applies on the full premium.”
Fact: No — it applies only on Own Damage premium, not third-party charges.
Myth
“NCB is lost if I change my insurer.”
Fact: Not true. You can transfer NCB to any insurer during renewal.
Final Thoughts
No Claim Bonus is one of the simplest yet most effective ways to reduce your motor insurance premium. By driving safely and avoiding unnecessary claims, you can save up to 50% on your insurance costs.
Understanding NCB helps you make smarter decisions during renewal and ensures maximum benefits from your policy.