The no claim bonus, or NCB, is a discount on motor insurance that you get at renewal if you made no claim during the policy period. Insurers treat it as a reward for careful driving. The discount applies to the own damage portion of the premium in a comprehensive or standalone own damage policy. It does not apply to the third party premium, whose rates are notified separately.
How NCB grows
Under the system commonly followed in the market, NCB grows with consecutive claim free years. It generally starts at 20 percent after the first claim free year and rises over successive years to a maximum of 50 percent. Someone who has gone several years without a claim can therefore get a large discount on the own damage premium. The exact rates and conditions are written in your policy document, so read it carefully.
What happens when you claim
If you make an own damage claim during the policy period, the NCB usually drops to zero at the next renewal and starts again from the beginning. That is why it makes sense to do the maths before claiming for minor damage. If the repair cost is small and the NCB discount is large, many owners prefer to pay for minor repairs themselves. Some insurers offer an NCB protection add on, which keeps the NCB intact for a limited number of claims.
NCB belongs to the owner, not the car
A key feature of NCB is that it is linked to the owner, not the vehicle. If you sell your old car and buy a new one, you can carry your NCB to the new vehicle’s policy. For this, you obtain proof of NCB from your previous insurer, often called an NCB certificate or retention letter. When you sell a vehicle, the insurance policy is transferred to the buyer, but the NCB stays with you, and the buyer starts earning their own.
NCB also moves with you when you switch insurers. The new insurer gives the discount after checking last year’s policy and claim free status. Do not claim NCB with wrong information at renewal, because it can come to light during a later claim and lead to rejection.
When NCB is lost
NCB is at risk if you do not renew on time. Under prevailing rules, if the policy is not renewed within a certain period after expiry, the NCB benefit is lost. This period is generally taken as 90 days. Note your policy’s expiry date and renew before it ends. Driving without insurance after the policy expires is also an offence under the law.
What to check at renewal
At renewal, check the NCB percentage shown on the policy. Also review the insured declared value, add ons and deductibles. In online renewals, entering the previous policy number usually brings up the NCB automatically. If anything looks wrong, ask the insurer for a written correction. If that does not work, you can complain on IRDAI’s Bima Bharosa portal.
If you buy a new vehicle some time after selling the old one, ask the insurer how long the NCB retention letter remains usable, since insurers apply a validity window for carrying it forward. Keep the letter safely with your other vehicle documents.
Remember that the NCB applies only to own damage cover, so a large NCB on a vehicle with a very low insured value saves less money in absolute terms. Comparing the total premium after discount across insurers gives a clearer picture than comparing percentages.
In short, the no claim bonus is a discount on own damage premium for claim free years. It grows over consecutive years, travels with the owner and can be lost if you renew late. Always weigh your NCB before filing a small claim.
Also Read: Old vs New Tax Regime: Slabs, Deductions and How to Choose the Right One
Source: Insurance Regulatory and Development Authority of India, Bima Bharosa, IRDAI grievance portal
