A No-Claim Bonus (NCB) is a discount offered by motor insurance companies to policyholders who do not make any claims during a policy year. It is a reward for safe and responsible driving and helps reduce the premium at the time of policy renewal.
What Is NCB?
NCB is a percentage discount applied to the own damage (OD) premium of a motor insurance policy. It does not apply to the mandatory third-party liability premium. The longer you go without filing a claim, the higher your NCB percentage becomes.Although the exact rates may vary by insurer, a common structure is:
- 1 claim-free year – 20% discount
- 2 consecutive years – 25%
- 3 consecutive years – 35%
- 4 consecutive years – 45%
- 5 consecutive years – 50%
After five claim-free years, the discount usually reaches its maximum limit of 50%.
Key Features of NCB
- Policyholder-Based Benefit: NCB belongs to the policyholder, not the vehicle. If you sell your car and buy a new one, you can transfer the accumulated NCB to the new vehicle.
- Transferable Between Insurers: If you switch to another insurance company, you can carry forward your NCB, provided you submit proof from your previous insurer.
- Time-Sensitive: NCB is generally valid for a limited period after policy expiry (often up to 90 days). Failure to renew within this period may result in losing the accumulated bonus.
What Happens If You Make a Claim?
If you file a claim during the policy year, your NCB usually resets to zero at the next renewal. This means you lose the discount and your premium increases.However, insurers often offer an NCB Protection Add-on. With this optional cover, you can make a limited number of claims without losing your accumulated bonus.
Note: No-Claim Bonus is an important feature of motor insurance that rewards careful driving and reduces renewal premiums. By avoiding unnecessary claims and renewing your policy on time, you can maximize your NCB benefits and enjoy long-term cost savings.