What is No-Claim Bonus in your Motor Policy?

All of us are aware of the increasing prices and taxes on buying an Insurance policy hence it has become very necessary for the Vehicle Owners to understand how they can save on their Insurance Policy. One of the such provisions that Owners should keep in mind when they go out for renewing their existing policy is the factor of NCB i.e. No Claim Bonus.

No Claim Bonus is also known as No Claim Discount. No Claim Bonus is the discount provided to the Vehicle Owner as a gift from the Insurer for not raising any claim throughout the policy tenure. This discount is given on the premium that gets computed on your upcoming year's policy.

When you don't raise or lodge any claim in the first year of your policy, you are given 20% discount on your 1st renewal and similarly the percentage of NCB discount keeps on increasing each year when the Vehicle owner ensures that the claim is not raised consecutively:

No. Of Claim free Years Discount
One claim free year 20%
Two consecutive claim free years 25%
Three consecutive claim free years 35%
Four consecutive claim free years 45%
Five and Five Plus consecutive claim free years 50%

In case you end up raising a claim in any of the policy period in between then your NCB discount drops back to 0%; the NCB also drops to 0% when policy is not renewed within 90 days after expiry. Hence it is often advised to not raise claims if there is small amount of investment needed in rectifying the damage. You need to think from long term perspective than small and little instant gains.

Some important points to remember about NCB

  • NCB discount is eligible to the Vehicle owner and not the Vehicle. Hence, even if you change vehicles, you can retain your NCB
  • NCB is applicable only for Comprehensive policies and not on TP policies
  • NCB Discount percent increases only till 50% after which it freezes
  • NCB can be transfered from one Insurance provider to another i.e. you can seamlessly switch Insurance Company for your upcoming renewal
  • In case you are selling your Vehicle, only Insurance Policy is transfered whereas NCB stays with you
  • NCB is not an Add-on cover as many people tend to believe the same

Best of Luck on your purchase of Car Insurance Policy!