No Claim Bonus (NCB) In Car Insurance
3 min read
・Aug 28, 2024
Remember back in school when completing assignments and doing well in tests brought you closer to the top of your class? It was exciting to see your hard work pay off with better grades and recognition. Well, this reward system wasn’t just limited to your childhood. You can find a similar system in car insurance, too.
If you do not file any insurance claims during the policy period, the insurer rewards you with a premium discount in the next year. This reward is known as the No Claim Bonus in car insurance.
If you have a comprehensive car insurance policy, read this article to explore the benefits of no claim bonus, including how they can offer a significant financial advantage during renewal.
What Is No Claim Bonus (NCB)?
No Claim Bonus (NCB) is a reward given to the policyholder for not making any claims during the policy period. Think of it as a token of appreciation from your car insurance company for driving safely and keeping your vehicle claim-free.
No Claim Bonus in Car Insurance can significantly reduce your insurance costs. For every year that you do not make a claim, the discount on your premium increases. This is an attractive incentive for driving safely, as it directly rewards you with lower expenses on your comprehensive/own-damage car insurance policy.
But how exactly does a No Claim Bonus work? It begins with a basic discount on your premium for the first claim-free year. This is applicable only on Own-damage and Comprehensive policies, not third-party insurance policies. This discount grows with each claim-free year, maximizing your benefit. The longer you go without filing a claim, the greater the discount you receive on your renewal premium.
Why No Claim Bonus (NCB) Is Important?
Let’s explore the key Benefits of No Claim Bonus and how they can positively impact your insurance experience.
- Discounts For Safe Driving
Firstly, No Claim Bonus in car insurance offers greater discounts on your insurance premium for each year you drive without filing a claim. This directly reduces the premium costs for the policy.
- Accumulated Savings
Over time, these discounts are collected, leading to significant savings. If you have a comprehensive car insurance policy, where premiums can be higher due to the broader coverage, you can enjoy significant savings with NCB. This can go up to 50% for five consecutive claim free renewals.
- Transferability
A unique feature of the NCB is its transferability. If you decide to switch insurers or upgrade to a new car, you won’t lose your accumulated NCB. You can transfer the bonus to your new policy to continue enjoying the benefits of No Claim Bonus.
Rules Of Availing Of NCB
Understanding the rules for availing the No Claim Bonus in car insurance can help you maximize its benefits. Here’s everything you need to know:
- Benefit Cap :
The No Claim Bonus starts at a 20% discount on the premium and increases annually, reaching a maximum limit of 50%. Here’s a detailed breakdown:
| Claim-free renewals (years) | Discount on Premiums (%) |
| First claim-free renewal | 20% |
| Second claim-free renewal | 25% |
| Third claim-free renewal | 35% |
| Fourth claim-free renewal | 45% |
| Fifth claim-free renewal | 50% |
- NCB Computation :
Calculating your NCB is a straightforward process. It is based on the insurer’s policy and directly reflects your history of claims.
- Incorrect Declaration :
It is crucial to declare the NCB accurately when renewing or purchasing a policy. An incorrect declaration can lead to issues, such as policy cancellation or refusal of the claim.
How To Calculate NCB?
Imagine your car insurance premium is ₹10,000 annually. If you don’t make a claim for 3 years, here’s how your NCB will be calculated:
Discount Chart:
- 1st year: 20% off, you pay ₹8,000
- 2nd year: 25% off, you pay ₹7,500
- 3rd year: 35% off, you pay ₹6,500
Each year you don’t claim, the discount increases, saving you more on your premium.
Four Things to Do To Avoid NCB Termination?
- First and foremost, drive safely so you do not need to claim your insurance.
- Assess the damages before filing the claim. If the damage cost is much less than the discount you can get with NCB, you can avoid filing a claim.
- Get insurance renewed on time to get NCB.
- Do not forget to transfer NCB while transferring your car’s insurance to someone else.
In other words, a few common reasons for people not getting NCB are:
- Claim During Policy Term: If you file a claim during the policy term, your No Claim Bonus resets to zero. In this case, you will have to start from the beginning next year.
- Car Insurance Not Renewed: If you do not renew your car insurance within 90 days of expiry, you will lose your accumulated NCB. Ensure timely renewal to maintain your bonus.
- Insurance Transfer Without NCB Transfer: If you transfer your car insurance to another vehicle or insurer without transferring the NCB, you lose the bonus.
Key Takeaways
The No Claim Bonus rewards your discipline on the road, turning careful driving into benefits for your car insurance. It lets you enjoy exciting discounts on your car insurance premiums while maintaining the same coverage. For a convenient and streamlined insurance buying experience, consider using platforms like PhonePe.
Frequently Asked Questions
Is there any limit on the maximum amount of No Claim bonus that can be claimed in the policy tenure ?
Is NCB discount available along with Third-party car insurance ?
Is it good to always have a NCB protection add-on ?
Can we transfer NCB from the current owner of a vehicle to the new owner in case of exchange ?
Does missing a car insurance policy renewal date affect the NCB on that vehicle ?
