No Claim Bonus (NCB)

No Claim Bonus (NCB) is a discount the insurer applies to the own-damage (OD) portion of your motor insurance premium at renewal, as a reward for not filing a claim during the preceding policy year. It rewards careful driving and the avoidance of small claims. The NCB starts at 20% after the first claim-free year and rises in fixed steps — 25% after two claim-free years, 35% after three, 45% after four, and 50% after five or more claim-free years, where it plateaus.

Worked example: a car with an annual own-damage premium of ₹8,000 and a four-year NCB accrual of 45% will see the OD premium reduced to ₹4,400, a savings of ₹3,600 for the year. One important nuance: NCB applies only to the own-damage component, not to the statutory third-party premium. NCB is tied to the policyholder, not the vehicle, which means if you sell your old car and buy a new one, you can transfer your accumulated NCB to the new policy — the insurer issues an 'NCB retention letter' that you submit with the new policy.

NCB is completely lost if you claim during the year (regardless of the claim size), unless you bought an 'NCB protection' add-on which preserves the NCB on one or two claims per year up to a limit. A common misconception is that you should always claim for any damage to avoid 'wasting the cover'. In practice, for small repair costs (say, under ₹7,000 to ₹10,000 depending on your NCB slab), the NCB loss plus the policy year's higher premium can exceed the claim amount — you are better off paying out of pocket, keeping the NCB stack, and preserving a clean claim history which insurers sometimes price in at renewal.

Another common misconception is that NCB resets to zero if you switch insurers. It does not, as long as you transfer the bonus within 90 days of the previous policy's expiry using the NCB retention letter. After 90 days the benefit lapses.

Related: own damage, zero depreciation, NCB protection.