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Did You Know about No Claim Bonus or NCB on Car Insurance Policy

In India, a total of 4,37,396 road accidents were recorded in 2019. However, the accident rates were dropped by 35% in 2020 due to lockdown as per National Crime Records Bureau (NCRB) data. Therefore Motor Tribunals Act introduced Mandatory Car Insurance to help the family of the deceased who might have lost their lives in a car accident. 

You can buy a comprehensive car insurance policy in return for a small premium amount. In case of any accident, the insurance company will bear all the expenses but you need to raise a claim. If the insurance company finds all the terms and conditions to be satisfactory, they will settle the claim amount.


But do you know about No Claim Bonus (NCB), whereby policyholders are rewarded for not claiming in the given period? 20-50% of the discount can be earned by the policyholders for not making any claim for certain years. 

If you are buying your first car insurance online for the new car, you won’t be entitled to an NCB discount as it starts from the renewal of the policy. You can avail of the benefit from the next year only if you have not made any claim the previous year.

How NCB Works?

For e.g.:- You have a car with an Insured Declared Value (IDV) of Rs.5 lakhs and a premium amount of Rs.10,000 annually and have not initiated a claim in the past year. Then during the renewal of the policy, you will be entitled to a discount of 25% on an annual premium of Rs.10,000. This means your renewal policy premium amount will be 7500 (10000- 2500).

Here are a few points to understand to get the full benefit of NCB.

  1. NCB Discount 

Motor insurance companies offer NCB in the range of 20-50% for 1 to 5 years.

No claims in preceding 1 year of insurance20%
No claims in preceding 2 years of insurance25%
No claims in preceding 3 years of insurance35%
No claims in preceding 4 years of insurance45%
No claims in preceding 5 years of insurance50%

Note:- In case the policyholder makes a claim during any year, then they lose the NCB benefit for the next insurance renewal. 

  1. Forgoing small claim amounts  

It is always a wise decision to calculate and compare the claim amount and bonus amount ( in case if you did not raise the claim). If the bonus amount is bigger than the claim amount then in such conditions, policyholders should pay the claim amount from their own pocket and should avail the bonus amount from the company. 

  1. NCB is applicable upon switching

You can avail of the NCB even if you have switched from one insurance to another.  For e.g.:- If you bought car insurance from XX for the first 3 years and then switch to XYZ in the 4th year, you can avail NCB of 35% from XYZ.

  1. You can Transfer the existing Car NCB to your new car

Don’t worry if you have sold your car recently; you will still get existing NCB for the consecutive years on your new car policy. 

What are the steps to transfer to NCB?

  • If the NCB certificate is transferred from one vehicle to another, the owner should keep a transfer copy and the old registration copy safely.
  • You will need to ask for a transfer certificate from the insurance company and request to issue the NCB on the new policy after transfer.

Note:- If a policy is not renewed within 90 days of expiration, then the NCB discount will become invalid.

  1. NCB is not for third-party coverage 

You will not get NCB on third-party car insurance as it is for your car insurance policy and your car damage premium component.

So now you know all the benefits of being safe on the road. Try to get the full advantage of the same in lowering your premium every year. 

Buying a car insurance policy? Calculate car insurance premium on your old or new car and make an informed decision in buying the right car insurance policy online.