Understanding NCB in Motor Insurance: How No Claim Bonus Can Save You Money
- Square Insurance Brokers
- Nov 1, 2025
- 5 min read
When it comes to saving money on your motor insurance, few things are as rewarding as the No Claim Bonus (NCB). Many vehicle owners are unaware of how powerful this benefit can be — not just as a discount, but as a long-term reward for safe and responsible driving.
Whether you’re renewing your car or bike insurance, understanding NCB motor insurance can help you make smarter financial decisions and keep your premium costs low year after year.
Let’s break down everything you need to know — from what NCB is, how it works, and how you can maximize its benefits.
What is NCB in Motor Insurance?
NCB stands for No Claim Bonus. It is a reward offered by insurance companies to policyholders who do not file any claim during their policy period.
In simple terms, if you drive safely and don’t make a claim throughout the policy year, your insurer rewards you with a discount on your next year’s premium.
The NCB applies only to the own damage (OD) portion of your motor insurance policy, not on the mandatory third-party liability cover.
How Does NCB Work?
The No Claim Bonus is cumulative in nature — meaning, the longer you go without making a claim, the higher your discount becomes.
Here’s how the NCB structure generally works in India:
Claim-Free Years | Discount on Premium |
After 1 year | 20% |
After 2 years | 25% |
After 3 years | 35% |
After 4 years | 45% |
After 5 years or more | 50% |
So, if you renew your policy every year without making a claim for five consecutive years, you can enjoy up to 50% discount on your own damage premium.
Eligibility for NCB in Motor Insurance
You are eligible for No Claim Bonus if:
· You hold a valid comprehensive motor insurance policy.
· You have completed one full year without making any claim.
· Your policy is renewed within 90 days of expiry.
If your policy lapses and you fail to renew it within 90 days, your accumulated NCB is lost permanently.
Transferability of NCB
Many people don’t realize that NCB belongs to the policyholder, not the vehicle.
This means that if you sell your car or bike and buy a new one, you can transfer your accumulated NCB to the new vehicle’s insurance policy.
To transfer your NCB:
1. Request an NCB retention certificate from your insurer.
2. Share it with your new insurer while buying the policy.
3. Your discount will be applied to the new policy accordingly.
This is a great way to retain your benefits even after changing your car or insurer.
How to Calculate Your NCB
You can easily calculate your NCB savings using an online motor insurance calculator.
For example:Let’s say your own damage premium is ₹10,000.If you have a 35% NCB, your renewal discount will be ₹3,500.
This means you’ll only pay ₹6,500 for the own damage portion of your next premium — a significant saving just for maintaining a claim-free record.
When Can You Lose Your NCB?
Your No Claim Bonus can be lost under the following conditions:
· You make any claim during the policy year (even a minor one).
· You fail to renew your policy within 90 days of expiry.
· You cancel your insurance policy mid-term.
Tip: Sometimes it’s better to pay for small damages out of pocket rather than making a claim, especially if your NCB discount is higher than the repair cost.
How to Protect Your NCB
To safeguard your hard-earned bonus, insurers offer a special add-on called the NCB Protection Cover.
Benefits of NCB Protection Cover:
· Allows you to make one or two claims without losing your NCB.
· Keeps your accumulated NCB intact even after small claims.
· Ideal for new or high-value vehicles where repairs are costly.
Although it slightly increases your premium, the long-term savings often outweigh the additional cost.
Documents Required for NCB Transfer or Renewal
When renewing or transferring your NCB, you’ll typically need:
· Previous year’s policy document
· Renewal notice from the insurer
· NCB certificate (if transferring to a new insurer)
· Vehicle registration details
Advantages of No Claim Bonus (NCB)
Here’s why understanding and maintaining your NCB is essential:
Lowers your premium: Up to 50% savings on own damage premium.
Encourages safe driving: Rewards you for responsible vehicle usage.
Transferable benefit: Can be carried over to new vehicles or insurers.
Long-term savings: The higher your NCB, the lower your renewal cost.
Financial discipline: Promotes cautious and mindful driving habits.
Tips to Maximize Your NCB Savings
1. Avoid small claims: Pay minor damages yourself if cheaper than losing NCB.
2. Renew on time: Always renew before expiry to retain benefits.
3. Opt for NCB protection cover: Keeps your bonus intact after minor claims.
4. Compare insurers: Ensure your insurer offers NCB transfer and add-on flexibility.
5. Drive safely: Responsible driving minimizes accident chances and boosts NCB continuity.
NCB and IRDAI Guidelines
The Insurance Regulatory and Development Authority of India (IRDAI) regulates how insurers offer and calculate NCB benefits.
As per IRDAI norms:
· The NCB cannot exceed 50%.
· NCB can only be earned after completing one full claim-free year.
· It can be transferred across insurers or vehicles with proper documentation.
These guidelines ensure transparency and uniformity across all motor insurance providers in India.
Conclusion
The No Claim Bonus (NCB) is one of the simplest yet most effective ways to save money on your motor insurance policy. It’s a reflection of your safe driving habits and financial discipline.
Whether you own a car or a bike, maintaining a claim-free record can earn you up to a 50% discount on your premium — every single year!
So the next time you think of claiming small damages, consider the long-term value of your NCB. And if you’re buying or renewing your policy online, platforms like SquareInsurance.in make it easy to track, transfer, and protect your No Claim Bonus effortlessly.
Frequently Asked Questions
Q.1. What is the full form of NCB in motor insurance? NCB stands for No Claim Bonus. It is a reward given by insurance companies to policyholders for not making any claims during the policy period. NCB helps you save up to 50% on your own damage premium over consecutive claim-free years.
Q.2. What is the full form of OD in motor insurance? OD stands for Own Damage. This part of your policy covers losses or damages to your own vehicle due to accidents, theft, fire, or natural disasters. NCB is applied only on the Own Damage component of your premium.
Q.3. What is the full form of IDV in car insurance? IDV means Insured Declared Value. It represents the current market value of your vehicle and is the maximum amount your insurer will pay if your car is stolen or completely damaged beyond repair.
Q.4. What is the full form of IRDAI in insurance? IRDAI stands for Insurance Regulatory and Development Authority of India. It is the government body responsible for regulating and overseeing all insurance activities, ensuring fair practices and transparency in India’s insurance sector.
Q.5. How can I retain my NCB after selling my old car? You can retain your No Claim Bonus (NCB) by requesting an NCB Retention Certificate from your previous insurer. Submit this certificate to your new insurer to transfer the same NCB benefit to your new vehicle.
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