No Claim Bonus in Motor Insurance: What Is It and How Does It Work?
Direct answer: No Claim Bonus (NCB) is a discount on the motor insurance premium that your insurer gives you for every claim-free policy year. Like other insurers, Navi applies NCB as a discount on the Own Damage premium under its Comprehensive and Standalone Own Damage (SAOD) policies. It ranges from 20% to 50%, increasing with each consecutive claim-free year, and it does not affect the Third-Party premium. NCB belongs to you as the policyholder, not to your vehicle. It carries forward when you switch cars, bikes, or insurers, as long as you renew your policy on time.
Key Takeaways
- NCB is a discount of 20% to 50%, based on your number of consecutive claim-free years.
- It reduces only the Own Damage premium, not the Third-party premium.
- Filing even one claim resets your NCB to zero at renewal.
- NCB is linked to the policyholder, not the vehicle. You can carry it forward to a new car or a new insurer.
- If your policy expires, you can retain your NCB by renewing it within 90 days of the expiry date. This applies to both car and bike insurance.
- An NCB Protector (also called NCB Secure) add-on lets you retain your NCB even after making a claim.
What Is No Claim Bonus (NCB) in Motor Insurance?
No Claim Bonus is a discount insurers offer policyholders for not filing a claim on their car or bike during the policy year. This discount is applied to your Own Damage premium when you renew your policy.
When you don’t make a claim, the insurer saves money and passes some of that saving on to you as a discount.
NCB is available only with Comprehensive and Standalone Own Damage (SAOD) policies. A Third-Party Only policy does not cover Own Damage, so NCB does not apply.
How Much Discount Can You Get With NCB Each Year?
NCB increases with every consecutive claim-free year, up to a fixed maximum of 50%. It does not increase after five consecutive claim-free years, even if you continue without making a claim. Insurers across the industry follow the same slab structure set by IRDAI. This applies to both cars and two-wheelers.
| Claim-free period | NCB Percentage |
|---|---|
| After 1 year | 20% |
| After 2 consecutive years | 25% |
| After 3 consecutive years | 35% |
| After 4 consecutive years | 45% |
| After 5 consecutive years | 50% |
How Is NCB Calculated?
Suppose your Own Damage premium is ₹10,000 for the first year. If you do not make a claim during that year, you get the NCB applicable at the next renewal. If you continue without making a claim, the NCB increases with each consecutive claim-free year.
| Policy year | Claim-free period | NCB | OD premium after NCB |
|---|---|---|---|
| 1st year | No claim yet | – | ₹10,000 |
| 2nd year | 1 claim-free year | 20% | ₹8,000 |
| 3rd year | 2 claim-free years | 25% | ₹7,500 |
| 4th year | 3 claim-free years | 35% | ₹6,500 |
| 5th year | 4 claim-free years | 45% | ₹5,500 |
| 6th year | 5 claim-free years | 50% | ₹5,000 |
How Can You Check Your Current NCB Status?
There are a few ways to check your NCB status, depending on your insurer:
- Check your policy document: With Navi, you can check your current NCB status in your latest motor insurance policy document.
- Ask your insurer directly: Contact your insurer to confirm your current NCB status or request an NCB certificate.
- Check your insurer’s app or website: If your insurer provides this information online, you can find your NCB status under your policy details or renewal section.
How Do You Protect or Transfer Your NCB?
Transferring to a new vehicle
NCB belongs to you as the policyholder, not to your vehicle, so it can be carried forward when you buy a new car or bike. It can only be transferred to another vehicle of the same type, such as from one car to another car or one bike to another bike. You’ll need to submit proof of your claim-free record, typically your existing policy document or an NCB certificate, to the new insurer.
Transferring to a new insurer
The same principle applies when switching insurers. Your new insurer will ask for proof of your NCB history from your previous insurer before applying the discount.
Grace period if your policy lapses
If you let your policy expire, you can still retain your NCB, but only if you renew within a set window. For both car and bike insurance, the window is 90 days from the expiry date. Renew after this window, and your NCB resets to zero even if you never filed a claim.
NCB Protector or NCB Secure add-on
This add-on lets you retain your NCB discount even if you file a claim during the policy year. It’s a way to protect a high NCB percentage you’ve built up over several years, without losing it to a single claim.
Navi offers NCB Secure for both car and bike policies. Under NCB Secure, you can make one claim and still receive the next applicable NCB discount when you renew your insurance.
When transferring your NCB between insurers, renew your policy within 90 days of the previous policy’s expiry. If you do not, your NCB will lapse and reset to 0%.
What Documents Do You Need to Transfer Your NCB?
The exact list can vary slightly by insurer, but you’ll typically need:
- NCB Certificate issued by your previous insurance company
- A copy of the expiring motor insurance policy document.
- Proof of Vehicle Sale (If applicable)
- Registration Certificate (RC) of the car or bike you are transferring your NCB to
- Identity Proof of the policyholder
- NCB Transfer Application
Your NCB certificate can also be a renewal notice or a letter from your previous insurer that shows your NCB. If you can’t get either of these, your new insurer may ask you to sign a declaration stating your NCB instead. The new insurer will then check it with your previous insurer.
Navi handles NCB transfers through an endorsement, using the policy document for the transfer.
What Happens to Your NCB If Your Car or Bike Is in an Accident or Declared a Total Loss?
If you make a claim under your Own Damage cover after an accident, your NCB may be affected at renewal, unless an applicable NCB Secure add-on protects it.
In a total-loss or theft case, NCB is irrelevant because the vehicle is no longer insurable for renewal under the same policy.
What Happens If You File a Claim, and When Should You File It?
If you file a claim during the policy year, your NCB resets to zero at the next renewal, no matter how many claim-free years you had before.
This also applies to small claims, such as windshield repairs or minor dent damage to a car, or a broken mirror or indicator on a bike. The only exception is if you have an NCB Secure add-on, which can protect your accumulated NCB even after a claim.
So, before filing a claim for minor damage, compare the repair cost with the NCB discount you could lose at renewal.
If the repair cost is lower than the NCB discount you could lose on future renewals, paying for the repair yourself may save you money in the long run. But if the repair cost would put a strain on your finances, filing a claim may make more sense, even with the NCB reset.
No fixed rupee amount works for everyone. Consider your own damage repair cost, OD premium, and current NCB before deciding whether to file a claim.
Conclusion
If you want to make the most of your NCB, keep track of your claim-free years and renew your policy on time. Your NCB gives you a discount on your Own Damage premium, and you can carry it with you when you change your car, bike, or your insurer.
If you have built up a high NCB, you can also consider an NCB Protector/Secure to help protect your discount after a claim. For details specific to your policy, such as how to check your NCB or request an NCB certificate, check with your insurer directly.
FAQs
No. NCB is tied to the policyholder who earned it and cannot be transferred to another person while they are alive. If the policyholder dies and their car or bike is transferred to their spouse, children, or parents, the NCB can pass to them after they submit the required documents to the insurer.
No. Your NCB is affected only when you make a claim under your Own Damage (OD) cover.
It takes five consecutive claim-free years to build your NCB back to 50%. You get 20% after the first claim-free year, and it increases each year until it reaches 50% after five years.
You can check your current NCB status in your motor insurance policy document.
