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Thursday, September 21, 2023

Understanding No Claim Bonus (NCB) in Car Insurance: A Comprehensive Guide

No Claim Bonus (NCB) is an essential component of car insurance that rewards policyholders for safe driving and claim-free years. This article aims to provide a comprehensive understanding of No Claim Bonus, its significance, calculation, transferability, and the benefits it offers to car owners in terms of reduced premiums and increased coverage. Whether you are a new car owner or considering renewing your car insurance policy, this guide will help you navigate the intricacies of No Claim Bonus in car insurance.

What is No Claim Bonus (NCB)?

  1. Definition: No Claim Bonus (NCB) is a discount offered by insurance companies to policyholders who have not made any claims during the policy term.
  2. Safe Driving Reward: NCB is a reward system designed to encourage and acknowledge safe driving practices, as it incentivizes policyholders to maintain a claim-free record.

Calculation of No Claim Bonus

  1. Percentage-based System: NCB is calculated as a percentage of the own damage premium of the car insurance policy and not the entire premium amount.
  2. Incremental NCB: The NCB percentage increases with each consecutive claim-free year, reaching a maximum limit, usually capped at 50%.
  3. Slab Structure: Insurance companies follow a slab structure for NCB, where different percentages are assigned based on the number of claim-free years.
  4. NCB Transfer: NCB can be transferred from one insurer to another when policyholders switch their car insurance provider.
  5. Impact of a Claim: Making a claim during the policy term results in the loss of accumulated NCB or a reduction in the NCB percentage for the subsequent year.

Benefits of No Claim Bonus

  1. Premium Reduction: The primary benefit of NCB is a reduction in the car insurance premium during policy renewal. The discount percentage increases with each claim-free year, leading to significant savings on premiums.
  2. Cost Savings: Accumulating NCB over the years can result in substantial cost savings on car insurance premiums, rewarding policyholders for their safe driving practices.
  3. Enhanced Coverage: NCB can also lead to enhanced coverage options and additional benefits as insurers provide better terms and features for policyholders with a higher NCB percentage.
  4. Policy Upgrades: Accumulated NCB can be utilized to upgrade the car insurance policy to a higher coverage plan or to include add-on covers for increased protection.
  5. NCB Protector: Some insurers offer an NCB protector add-on, which safeguards the accumulated NCB even if a claim is made during the policy term, ensuring that policyholders do not lose their NCB benefits.

Eligibility and Criteria for NCB

  1. Claim-Free Years: To be eligible for NCB, policyholders must have a claim-free record throughout the policy term.
  2. Timely Renewal: NCB is applicable only if the car insurance policy is renewed within the grace period or before it expires.
  3. Policyholder Transfer: NCB can be transferred to a new car if the policyholder sells the existing vehicle and purchases a new one.
  4. Policyholder Change: NCB can also be transferred to another person if the policyholder sells the vehicle to someone else. However, this may vary depending on the insurer’s policy.
  5. Expiry and Restoration: NCB is usually valid for a specific duration, and if not utilized during that period, it may expire. However, some insurers provide a restoration option to reinstate the NCB even after a claim has been made.

Documentation and Claim Process for NCB

  1. NCB Certificate: When renewing the car insurance policy, policyholders need to obtain an NCB certificate from their existing insurer. This document serves as proof of the NCB percentage accumulated.
  2. Claim Intimation: In case of an accident or damage, policyholders must inform the insurance company about the claim and follow the prescribed claim intimation process.
  3. NCB Verification: The insurance company verifies the NCB percentage mentioned in the NCB certificate and applies the relevant discount to the premium during policy renewal.
  4. Supporting Documents: Policyholders may be required to submit relevant documents, such as previous policy documents, NCB certificate, claim settlement documents, and other supporting proofs as requested by the insurer.
  5. Online NCB Transfer: With the advent of online car insurance platforms, NCB transfer and documentation processes have become more streamlined, allowing policyholders to transfer their NCB easily while purchasing or renewing policies online.


No Claim Bonus (NCB) is a significant benefit provided by car insurance companies to reward policyholders for maintaining a claim-free record. It offers premium discounts, cost savings, enhanced coverage, and other benefits, making it an essential aspect of car insurance in India. Understanding the calculation, transferability, eligibility criteria, and claim process related to NCB helps policyholders make informed decisions and maximize their benefits. Make sure to consult with your insurance provider, maintain safe driving practices, and enjoy the advantages of No Claim Bonus while ensuring the protection and financial security of your vehicle.


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