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by Anand Prakash Gupta
Car insurance is often renewed every year without much thought. Many policyholders focus only on the premium amount and miss out on one of the biggest money-saving benefits in motor insurance. This benefit is called the No Claim Bonus.
If you have ever wondered what No Claim Bonus means or how it helps reduce your car insurance premium, you are not alone. Many car owners are not fully aware of how valuable this benefit is or how to protect it.
This blog explains No Claim Bonus in car insurance, how it works, how much you can save and why maintaining it can significantly reduce your insurance costs over time.
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No Claim Bonus, commonly known as NCB, is a reward given by insurance companies to policyholders who do not make any claim during the policy year.
If you complete a full year of car insurance without raising a claim, your insurer offers a discount on the premium at the time of renewal. This discount is your No Claim Bonus.
No Claim Bonus is applicable only on the own damage premium of a comprehensive car insurance policy. It does not apply to third-party insurance premium.
No Claim Bonus increases with every claim-free year. The longer you drive without making a claim, the higher the discount you receive on your premium.
Here is how No Claim Bonus typically grows:
Once you reach the maximum of 50 percent, the No Claim Bonus remains at that level as long as you do not make a claim.
The main benefit of No Claim Bonus is lower insurance cost.
Since NCB is a percentage discount on your own damage premium, it directly reduces the amount you pay during renewal.
For example, if your own damage premium is ₹10,000 and you have a 50 percent No Claim Bonus, you will pay only ₹5,000 for that component.
Over the years, this can lead to significant savings, especially for long-term car owners.
No Claim Bonus is important for more than just saving money.
It encourages responsible driving and careful use of your vehicle. Drivers who maintain a good driving record are rewarded with lower premiums.
It also helps offset the increase in premium caused by rising repair costs and inflation.
For many car owners, No Claim Bonus becomes the biggest factor in keeping insurance costs under control.
No Claim Bonus is available only with comprehensive car insurance policies.
Third-party insurance does not include own damage cover, which means there is no scope for No Claim Bonus.
If you want to enjoy the benefit of NCB, you must have a comprehensive motor insurance policy.
If you make even a single claim during the policy year, your No Claim Bonus resets to zero at the time of renewal.
This means:
This is why many car owners avoid claiming for small repairs and pay out of pocket to protect their No Claim Bonus.
This is a common dilemma.
If the repair cost is small, it is often better to avoid making a claim and protect your No Claim Bonus. The long-term savings from NCB may be higher than the claim amount.
However, for major accidents or costly repairs, making a claim makes sense. The purpose of insurance is to protect you from large financial losses.
The decision should be based on comparing the repair cost with the value of your No Claim Bonus.
No Claim Bonus Protection is an add-on cover available with comprehensive car insurance.
This add-on allows you to retain your No Claim Bonus even if you make a claim, subject to policy terms and limits.
It is useful for:
While this add-on increases the premium slightly, it helps protect long-term savings.
Yes, No Claim Bonus belongs to the policyholder, not the car.
If you sell your old car and buy a new one, you can transfer your No Claim Bonus to the new car insurance policy.
To do this, you need:
Transferring NCB helps you save on insurance premium even when you change vehicles.
If your car insurance policy lapses and is not renewed within the allowed time, you may lose your No Claim Bonus.
Most insurers allow a limited grace period. Beyond that, the accumulated NCB may be forfeited.
This is why timely renewal of car insurance is critical for protecting your No Claim Bonus.
If your car is stolen and you file a claim, your No Claim Bonus is reset to zero.
However, if the theft claim is not filed or if the policy has NCB protection add-on, the impact may differ based on insurer terms.
Always check your policy wording for clarity.
Many people believe No Claim Bonus reduces the third-party premium. This is not true.
NCB applies only to the own damage premium.
Another myth is that NCB cannot be transferred. In reality, NCB is fully transferable when you buy a new car.
Understanding these details helps you use No Claim Bonus more effectively.
Here are a few practical tips:
These steps help you build and retain your No Claim Bonus year after year.
Who Benefits the Most From No Claim Bonus?
No Claim Bonus is especially beneficial for:
Over time, NCB can significantly reduce ownership costs.
No Claim Bonus is one of the most valuable benefits in car insurance, yet it is often overlooked.
By understanding how No Claim Bonus works and how it reduces your premium, you can make smarter decisions about claims, renewals and policy upgrades.
Insurance is not just about protection during accidents. It is also about rewarding safe driving and reducing long-term costs.
If you drive responsibly and manage your insurance wisely, No Claim Bonus can save you thousands of rupees over the years.