‘No Claim Bonus’ or NCB is the reward that motor insurance companies give to their customers for not raising a claim during a policy year. In fact, you can get a flat 20% discount on your insurance premium during renewal for the first claim-free year. Moreover, the NCB percentage can accumulate with every claim-free year if you do not avail of NCB. However, there is a cap on it, i.e. after five consecutive claim-free years, NCB is capped at 50%.
In this way, a motor insurance policyholder gets NCB in the form of a discount during his/her policy renewal and it can range between 20-50%. Moreover, it is transferrable from one insurer to another and even if the policyholder purchases a new vehicle. Let us learn more about these concepts here:
How to Calculate the NCB?
As mentioned above, the NCB is applicable in case of a full claim-free year. So, it starts with the second year of your insurance policy. If you do not make any claims for the first year of your car insurance, you get approximately a 20% discount during policy renewal. But to avail of that you have to renew your car insurance policy before it expires.
So, NCB starts with 20%, which you get for one claim-free year and increases with every claim-free year thereafter. When your NCB reaches five claims-free years, it gets capped at 50%.
Refer to the below table to understand how NCB is calculated:
Number of Claim Free Years | No Claim Bonus (NCB) Percentage |
1st claim-free year | 20% |
Two consecutive claim-free years | 25% |
Three consecutive claim-free years | 35% |
Four consecutive claim-free years | 45% |
Five consecutive claim-free years | 50% |
The rates are fixed for all the insurers and are as per IRDAI guidelines. However, the insurer may change them slightly, so check with your insurer.
Benefits of No Claim Bonus:
Here are the benefits that you get if you accumulate NCB:
Pay Lower Premiums: As mentioned, NCB is the reward that you get for not making any claim during a policy year. So, if you avail of it, you get a discount during your motor insurance policy renewal. In this way, you will have to pay a lesser premium.
You Can Transfer NCB: If you are worried about your NCB when you sell your old car and buy a new one, do not worry. NCB is associated with you not your vehicle, so it will also be transferred. However, the new car to which you are transferring NCB should be of the same class as the old car on which NCB was earned. In addition, if you want to buy motor insurance from another insurer, then the NCB can be transferred from one insurer to another.
When Is NCB Cancelled or Terminated?
Here are the conditions under which your No Claim Bonus is terminated or cancelled:
If you make a claim, NCB is terminated.
If you do not renew your motor insurance policy within 90 days of its expiry, then the NCB discount becomes invalid.
How to Transfer NCB If You Want to Change the Insurer:
Follow the below steps to transfer your NCB discount if you want to change your insurer:
Step 1: Contact your current insurance provider and raise a request to transfer NCB.
Step 2: Get an NCB certificate from your insurance company.
Step 3: Get an insurance policy from a new insurance company and your NCB will be transferred automatically once you confirm your NCB details. The new insurance companies cross-check the NCB details and transfer them without any hassle.
How to Transfer NCB When You Change Your Vehicle:
In case of vehicle change, you can transfer your NCB only if the new vehicle is of the same class as the old vehicle on which the NCB is earned. If this condition is met, you can transfer your No Claim Bonus by informing your insurance provider. The insurance provider will then issue the NCB transfer certificate.
Note: NCB cannot be transferred from one person to another. However, if the policyholder dies, then his/her legal heir is eligible to get NCB.
Documents Required to Transfer NCB:
Duly filled ‘No Claim Bonus’ application form.
Sale document of your car.
How Can You Protect Your NCB?
To retain NCB, renew your car insurance policy within 90 days of its expiry.
Drive safely and follow traffic rules to avoid any accidents.
Some insurance providers also offer No Claim Protection rider. This rider or add-on protects your No Claim Bonus even if you make a claim up to a certain pre-defined limit.
Terms and Conditions of No Claim Bonus:
The NCB certificate you get from the insurer is considered as No Claim Bonus proof.
The NCB for commercial vehicles can be different from NCB for personal vehicles. Refer to your policy documents, if you own a commercial vehicle.
The cost of roadside assistance does not impact NCB. Therefore, if you request a claim under roadside assistance, it will not impact your NCB.
NCB is not offered if you have only third-party insurance coverage. It is offered on a comprehensive motor insurance policy or own damage cover.
Conclusion:
No Claim Bonus or NCB is one of the best benefits that you get with your motor insurance policy. To accumulate this benefit, you must drive carefully so that you do not have to claim your vehicle insurance policy. However, you cannot control everything and there can be instances where the accident happens because of someone else’s fault. For such situations, adding NCB protection cover can be helpful. This cover protects your NCB even if you make a claim, but up to a pre-defined limit.
