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All You Need To Know About No Claim Bonus

If you own a car, you are bound to have a car insurance policy for it. The Motor Vehicle Act of 1988 makes it compulsory for all vehicles to be insured before they can run on the road. This is definitely a commendable decision, given that motor vehicles pose a grave danger if the driver is not careful behind the wheel. In exchange for the protection extended by the motor insurance company, you, the policyholder, are required to make timely premium payments. Now premiums generally tend to rise overtime, and this can be a bummer for many. But the good news is that all motor insurance policyholders can benefit from no-claim bonus - a feature that offers a unique proposition whereby premium rates actually go down.

What is no claim bonus?

The NCB fetches you a discount on your premium for safe driving. Here, a policyholder stands to get a discount on the premiums for the subsequent years if s/he does not make any claims until the time of policy renewal. This discount goes up every year, provided that no claim has been filed. It should be noted that NCB is not applicable on liability premium, rather only on the own damage premium. This means if you have opted for a third party cover, you will not be eligible for a no claims bonus.

Percentage discount on premiums

The no claim bonus on car insurance premiums can range anywhere from 20% to 50%. If you do not make a claim in the first year, you will be eligible for a 20% discount on the first policy renewal, after two consecutive claim free years, you will be eligible for a 25% discount and so it goes. This discount can go up to 50% after five consecutive claim free years.

The No Claim Bonus is generally as per the following table:

After one claim-free year


After two claim-free years


After three claim-free years


After four claim-free years


After five claim-free years


Protect no claim bonus - Avoid filing small claims

Although you may feel like making a claim every time your vehicle sustains minor damages, it is best to avoid it. Instead carry out a cost-benefit analysis and then decide whether you want to make a claim. Your NCB goes back to zero even when you make a claim, even when it's small. By forgoing smaller claims, you save quite a bit in the form of discount on the following year's premium thanks to NCB.

No claim bonus retention add-on cover

Even a small claim can cause you to lose your no claim bonus. That is why some motor insurance companies offer customers the option of choosing a NCB retention add-on cover. Under this, you can make claims up to a certain limit and your NCB will not be affected. The add-on lets you avail full discount on the annual premium even if you have made a claim.

Applicable even as you switch motor insurers

Your NCB can be transferred even when you move from one insurance company to another. If you have availed a car insurance policy from ABC insurer and in the 5th year you decide to shift to XYZ insurer, you still get a 50% NCB from XYZ insurer. In case of any doubts, your new motor insurer can seek a declaration from the previous insurer to clarify whether the no-claim bonus is genuine.

Have any questions about No Claim Bonus? Feel free to reach us at 86559 86559.



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