In India, millions of cars are being sold each and every year. The boom in car sales has led to a jump in car insurance purchases as well. This is because it is mandatory to have at least third-party insurance to drive any type of vehicle on Indian roads. However, the third-party cover alone is definitely not sufficient. Car owners often opt for additional coverage in the form of comprehensive insurance for their vehicles as accidents and unfortunate events can create a big dent in their pockets.

Car owners have to pay higher premiums when buying additional coverage. However, they can hope to get some discount on the premium payable next year at the time of renewal. The insurance provider reduces the renewal premium depending on whether the car owner filed any claims or not during the previous year. The discount is referred to as the No Claim Bonus (NCB). The aim of this post is to provide some important information as regards the NCB.


What is No Claim Bonus (NCB)

No Claim Bonus (NCB) is actually a reward provided by insurance companies to those customers that have not filed any claims during a policy year. This means that people who drive carefully for a year and do not make claims towards car damages during the policy period are eligible for a discount in renewal premium. The insurer offers a discount in recognition of the fact that the car owner is a safe driver.


How Does NCB work?

The working of the NCB is similar to any other reward program. It motivate scar owners to continue to drive safely. In fact, they try their best not to raise claims for minor damages. This way they don’t lose their eligibility to get the NCB benefit at the time of renewal.

When the policyholder renews his/her car insurance at the end of the first year, he/she becomes eligible for a 20 percent discount in premium. As discussed earlier, the discount is applied only if the policyholder has not filed any claims during the first policy year. Subsequently, the car owner gains an additional 5 percent from the second no-claim year onwards. This way the discount can go up to 50 percent in the sixth consecutive no-claim year.


No Claim Bonus Benefits

Lower premiums– Policyholders can get from a 20 percent to 50 percent discount in renewal premiums.

Earn rewards– The NCB is nothing but a reward for taking good care of the car and driving safely.

Beneficial to policyholders– As the reward is given to policyholders and not the car, the NCB remains with the owner even if he/she sells the insured car and buys a new one.

Transferable - The NCB may be transferred when changing the car or the insurer.


Important things to know about the NCB

  • The No Claim Bonus is terminated if a claim is filed during the policy year or renewal is not done within 90 days from the expiry date of the current policy
  • The NCB is offered only with the Own Damage cover or Comprehensive policy
  • If you have only third-party insurance, the NCB is not applicable
  • The add-on covers are eligible for any NCB benefit
  • The add-on cover NCB protector bought for an additional premium payment helps policyholders retain their eligibility even if they file a claim during a policy year
  • In the event of an accident or the car being stolen, the applicability of the NCB is dependent on:
    • The insurer recovering a major part of the expenses from the other party
    • The determination of fault if a third party is involved




Q1: Do I forego my No Claim Bonus eligibility if I stop driving?

A1: No, you will not lose your eligibility. You will forego your eligibility only if you file a claim or do not renew the policy prior to the expiry date.


Q2: How can I transfer the NCB facility to my new Car Insurance?

A2: You need to submit the buyer-seller agreement (Forms 29 & 30) and a request letter to the current insurer. The company will issue the NCB certificate. The certificate should be submitted to the new car insurer. If you are buying online, you just have to declare the NCB and existing policy numbers and the insurer’s name. The new company will take care of the rest.


Q3: Is the NCB an add-on?

A3: No, the NCB is not an add-on.


Q4: I have two cars. Can I use the NCB for both the cars?

No. The discount is applicable only to one car. You have to buy a separate policy for your second car and accumulate its own NCB.

go to top img

Insurance Companies