What is a No Claim Bonus in Car Insurance?

No Claim Bonus is the prize you get for being a responsible driver. The longer you don't file a claim for any accident, the bigger discount you'll get on your next premium. Apart from being a reward, the No Claim Bonus on your car insurance also fosters responsible driving. However, you'll still have to learn the terms and conditions for filing the claim, how much you'll be saving and what will happen when you file a claim later. 

What is NCB in Car Insurance?

A No Claim Bonus or NCB in car insurance is a type of incentive that the insurance company offers you if you do not file any accidental claim during the policy period. When you renew your policy after it has expired, you will receive the NCB discount, which will lower the overall premium. 

The No Claim Bonus benefit depends on how long (preferably years) you have gone without filing a claim. The No Claim Bonus benefit can eventually vary between 20% to 50%. 50% is the maximum cap limit that you’ll receive as a discount for your car insurance premium.  

How is NCB Calculated?

NCB is usually applicable from the beginning of the second year. The first discount that you receive on the premium is around 20%. However, this may increase in the future based on the consecutive claim-free years. NCB will only be calculated for own damage purposes on the premium and not for the third-party. 

Here's a brief look at the NCB calculations every year:

Age of the Policy (usually after the term specified below)	No Claim Bonus Car Insurance Percentage
One year of filing no claim	20%
Two years of filing no claim	25%
Three years of filing no claim	35%
Four years of filing no claim	45%
Five year of filing no claim	50%

While NCB offers a significant discount, it's essential to note that this offer may be invalid under specific conditions. These include:

• If you file for a claim within the policy period. 
• If you do not renew the policy within 90 days of policy expiration. 

Benefits of NCB in Car Insurance

No Claim Bonus car insurance comes with a wide range of advantages that can be helpful in the long run. Some of the key benefits of NCB in car insurance include the following:

1. Lesser Premiums: As mentioned earlier, if you do not file for any claim within your policy year, you will receive a significant discount on the premium after renewal. This discount will increase with every consecutive claim-free year. The maximum discount you will receive on the premium is around 50%. 
2. Easy to transfer: If you sell your old car and buy a new one, you have complete flexibility to transfer the NCB to your new car. However, there are specific terms about transfer that you’ll have to follow. The new car to which you're transferring the NCB should belong to the same class as your old car. Apart from that, if you wish to buy car insurance from any other company, you can transfer the no claim bonus from your previous provider to your new one. 
3. Peace of mind: As the car owner, you receive a No Claim Bonus. It is a financial safety net that promotes safe driving behaviour. Therefore, NCB in car insurance is the benefit you earn whether you sell your old car or buy a new one. Since it is easily transferable, you wouldn't be losing any significant sum either. 

Important Points to Know

Here are some of the things you must know about NCB in car insurance:

1. You can file for NCB only for your own damage components and not third-party premiums.
2. The discount percentage increases up to 50% for consecutive claim-free years, starting from 20%. 
3. You should thoroughly check the NCB benefits you're receiving while renewing your insurance policy.
4. You can carry your NCB over to a new insurance provider, but only at the time of renewal.
5. In case of transfer or switch, your insurer will issue the NCB certificate. Then, as the policyholder, you can submit the same to your new insurer.