When buying or renewing motor insurance, one of the most effective ways to reduce your premium is through the No Claim Bonus (NCB). This reward system encourages safe driving by offering discounts on your insurance premium if you do not raise claims. But many policyholders are unsure about how NCB works, how it is calculated, and how it can be maximized.

This article will give you a clear understanding of NCB calculation, benefits, myths, and tips so you can make smarter decisions at renewal.

✅ What is No Claim Bonus (NCB)?

No Claim Bonus (NCB) is a reward given to policyholders for not making any claims during the policy year. It applies only to the own damage (OD) portion of a motor insurance premium, not the mandatory third-party liability cover.

In simple terms, the longer you drive without raising claims, the bigger the discount you get on renewal.

📊 How is NCB Calculated?

The Insurance Regulatory and Development Authority of India (IRDAI) has set standard slabs for NCB across all insurers.

👉 Example: If your OD premium is ₹15,000 and you haven’t filed any claim for 3 years, your NCB is 35% = ₹5,250, making your payable OD premium ₹9,750.

⚖️ Key Rules of NCB

1. NCB belongs to the policyholder, not the car

   • If you sell your car, you can transfer your NCB to your new vehicle or new insurer.

   • NCB does not transfer to the new owner of your sold car.

2. One claim can reset NCB

   • Even a minor claim can bring your NCB back to zero.

   • To avoid this, many people pay for small damages out-of-pocket.

3. NCB Protection Cover

   • This add-on lets you retain your accumulated NCB even if you file one or two minor claims in a policy year.

4. Renew on time

   • You must renew within 90 days of policy expiry. Beyond this grace period, your accumulated NCB lapses.

5. Maximum limit

   • NCB cannot exceed 50%, regardless of how long you drive claim-free.

🚗 Real-Life NCB Calculation Example

Let’s say your OD premium is ₹12,000:

• Year 1: No claim → 20% discount = ₹2,400 → Pay ₹9,600

• Year 2: No claim → 25% discount = ₹3,000 → Pay ₹9,000

• Year 3: No claim → 35% discount = ₹4,200 → Pay ₹7,800

• Year 4: Claim filed → NCB reset = 0 → Pay ₹12,000

• Year 5: No claim → 20% discount = ₹2,400 → Pay ₹9,600

This shows how even one claim can disrupt years of accumulated savings.

❌ Common Myths About NCB

• Myth 1: NCB applies on the full premium.

  • Fact: It applies only on the OD premium, not third-party premium or taxes.

• Myth 2: NCB is lost if you switch insurers.

  • Fact: NCB is transferable between insurers as long as you provide proof of claim-free history.

• Myth 3: NCB is the same as a loyalty discount.

  • Fact: NCB is a regulated reward under IRDAI norms, not a discretionary discount.

💡 Tips to Maximize Your NCB

• Pay for minor repairs yourself if costs are lower than your NCB savings.

• Opt for NCB Protection Cover if you want peace of mind.

• Always renew before expiry to retain accumulated benefits.

• Transfer your NCB when buying a new vehicle or switching insurers.

❓ Frequently Asked Questions (FAQs)

Q1. Does NCB apply to both cars and two-wheelers?
Yes, NCB benefits are available for both car and two-wheeler insurance policies.

Q2. Can I transfer NCB if I buy a new vehicle?
Yes, NCB belongs to you, not the vehicle. It can be transferred to your new car or bike.

Q3. What happens if I miss the 90-day renewal window?
You lose all accumulated NCB, and your discount resets to 0%.

Q4. Does filing a claim under third-party liability affect NCB?
No, only claims made under the own damage cover impact NCB.

📌 Key Takeaways

• NCB is a reward for claim-free driving, offering up to 50% discount on OD premium.

• Even a single claim can reset your NCB unless you have an NCB Protection Cover.

• Renewal on time and careful decision-making about when to file claims help maximize NCB savings.

• NCB is transferable across insurers and vehicles, ensuring continuity of benefits.

👉 With smart planning, you can save thousands of rupees over the years while enjoying comprehensive insurance protection.