No Claim Bonus in Car & Bike Insurance

When it comes to insurance, there's a noteworthy tool that can have a big impact on your finances: the No Claims Bonus (NCB). It's a special perk that rewards responsible drivers who haven't made any claims on their policies. Often overlooked, understanding NCB can unlock substantial savings on your insurance premiums. Read ahead to learn this feature’s ins and outs and how to leverage it to your advantage!

What is NCB?

If you’ve been wondering what NCB in auto insurance stands for, let’s clarify that. NCB stands for No Claims Bonus. Insurance companies offer a reward system to policyholders who have maintained a claim-free record over a specific period. It acts as a financial incentive for responsible driving behaviour. Essentially, the longer you go without making an insurance claim, the greater your NCB becomes. 

The bonus is typically awarded as a discount on your Own Damage insurance premium at the time of renewal. It reflects your low-risk status as a driver, encouraging safe practices and acknowledging your commitment to maintaining a clean claims history. With each claim-free year, your NCB accumulates, allowing you to enjoy significant savings on your insurance costs.

How Does NCB Work?

To be eligible for a No Claims Bonus (NCB), you must have a consecutive record of not making any insurance claims for one to five years. When renewing insurance, you receive an NCB certificate, and your eligibility for future benefits depends on whether you make claims or not. 

NCB discount isn’t applicable for the mandated third-party car insurance premium. The earned NCB percentage will be calculated only on the own damage premium, i.e. total premium minus the third-party liability premium.

Suppose you have a minor accident or encounter a small issue like a tire burst; in that case, you can choose to pay for repairs yourself instead of making a claim, preserving your claim-free status and earning a no-claims bonus during policy renewal.

How to Calculate NCB?

The no-claims bonus becomes applicable starting from the second year of your policy. If you haven't made any claims in the first year, your insurance provider rewards you with a 20% discount on your OD premium amount at the time of renewal. This discount continues for five consecutive claim-free years. To better grasp how a no-claim bonus calculator works, refer to the table below:

No. of Claim-free Years

NCB Discount

One Consecutive Year


Two Consecutive Years


Three Consecutive Years


Four Consecutive Years


Five Consecutive Years


Here’s an example of the same - 

Ms. Reddy pays an annual insurance premium of Rs. 24,000, of which Rs. 21,000 is for the own damage component. She hasn’t made an insurance claim in four consecutive years. 

She is therefore eligible for a premium discount of 45%.

Therefore at the time of renewal, she will only have to pay a premium of - 

(21,000-45%*21,000) = Rs.11,550

In certain cases, it makes more sense to pay out of pocket than make an insurance claim. 

For example, a small tree branch fell on Mr. Chandran’s car and caused damages that would cost him Rs.5,800. If he were to claim insurance, the total deductibles would be worth Rs.6,500. In this case, if he were to claim insurance, he would spend (6,500-5,800) = Rs.700 more than if he paid out of pocket. Additionally, he would be losing out on the NCB discount on his premium amount. In this case, it would make more sense to pay out-of-pocket than make an insurance claim.

Termination of NCB

The NCB will get terminated if:

  • An insurance claim gets raised.
  • The insurance plan does not get renewed within 90 days after the insurance plan’s expiry.

Benefits of Having an NCB

Lower Insurance Premiums

The No Claims Bonus (NCB) rewards responsible driving with reduced insurance premiums for the own damage premium component, offering higher percentages as you accumulate claim-free years for substantial savings.

Incentive for Safe Driving

NCB serves as an incentive for maintaining a clean claims record and encourages safe driving habits, which can result in fewer accidents and claims.

Transferable to a New Vehicle

NCB can be transferred when you sell your old car and purchase a new one.

NCB Protection

With a strong no-claims bonus, you can opt for NCB protection. This feature safeguards your bonus even if you make minor claims, preserving your accumulated discounts and ensuring continued lower insurance premiums.

How to Transfer NCB?

Your No Claims Bonus (NCB) is tied to you, not your car, which means you can transfer it when you purchase a new vehicle. The new car must fall under the same category as the one for which the NCB was earned. However, when you pass on a car to another individual, only the insurance policy will get transferred, the NCB will remain with you.

When switching insurance companies, you can transfer your NCB from one provider to another. During policy renewal, if you're changing insurers, simply present your previous year's policy document or renewal notice that mentions your NCB to facilitate the transfer. Buying car insurance online allows for a quicker process, as your NCB can be transferred based on your declaration without the need for a physical No Claims Bonus Certificate.

Transferring your NCB to a new car insurance policy can be done online, offline, or through an agent. When transferring online, inform your new insurance provider about your exact NCB, the name of your previous insurer, and the last policy number. The new insurer will handle the NCB transfer accordingly.

For offline or agent-assisted transfers, follow these steps:

  • Contact your previous insurer and request an NCB transfer.
  • Provide all necessary documents, including the buyer-seller agreement (Forms 29 and 30) and a letter requesting the NCB transfer.
  • Your previous insurer will issue a No Claims Bonus certificate.
  • Submit this certificate to your new insurance provider to complete the NCB transfer process.

Documents Required to Transfer NCB

  • Transfer application
  • NCB certificate 
  • Insurance photocopy
  • Forms 29 and 30 (Buyer-seller agreement)
  • Delivery note copy
  • Booking receipt photocopy
  • Ownership Transfer certificate

It's important to note that NCB cannot be transferred to another person unless the car owner passes away and the vehicle is transferred to a legal heir, who must receive the NCB within 90 days.

Advantages of NCB Insurance

Mentioned below are the benefits of having a no-claim bonus for your car:

  • The NCB is nothing more than a way for you to be rewarded for being a good and responsible driver and automobile owner.
  • The process of transferring your NCB is quick and painless if you are changing your insurer or vehicle. The only factor you need to do is change your policy before your existing one expires.
  • NCB is linked to you as an individual, not to your vehicle. This means that no matter what automobile you have, as long as you renew your car policies before they expire, you can continue to benefit from the no Claim Bonus for your car insurance.
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