What Is a No-Claim Bonus (NCB)? Everything You Need to Know

Published on August 06, 2026 | 11 min read

What Is a No-Claim Bonus (NCB)? Everything You Need to Know

Key Takeaways

A No-Claim Bonus benefit provides a discount on your car insurance renewal price when you do not make any claims during the year.
If a policyholder submits a claim within a policy year, their accumulated NCB benefit will be lost and will become zero at their policy renewal.
Policyholders can easily transfer their NCB to a new vehicle or keep it when switching motor insurance providers.
Policyholders can opt for NCB Protect coverage, which allows them to raise a specific number of claims without losing their accumulated NCB benefit.

NCB (No Claim Bonus) is a benefit offered by motor insurance providers that rewards policyholders for driving safely and making no claims within a policy year. It is awarded for maintaining a claim-free record, and this bonus results in a discount on your motor insurance premium. Yet many policyholders are unaware of this benefit or do not understand how it works.

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Let’s understand in detail what a No Claim Bonus is, how it works, its benefits, and how it is calculated.

What Is a No-Claim Bonus (NCB) and How Does It Work?

A No Claim Bonus (NCB) is a financial reward, i.e., a percentage discount on premium when renewing a motor insurance policy, provided no claims are made during the policy year. Insurance providers offer this benefit to encourage policyholders to drive safely, avoid unnecessary claims, and stay with their current insurer.

An NCB acts as an incentive for safe and responsible driving, and its discount increases with each consecutive claim-free policy year, subject to the terms and conditions of the insurance policy. If the policyholder raises an Own Damage claim, their accumulated NCB is generally reset to zero at the next policy renewal.

Many policyholders don’t understand the difference between premium and No Claim Bonus. Premium is the amount you pay to the motor insurance provider to keep your policy active, whereas the NCB is a is a percentage discount applied to the Own Damage premium at the time of renewal as a reward for maintaining a claim-free record during the policy year.

NCB applies only to comprehensive car insurance, own damage car insurance, and bike insurance policies. Policyholders having only a third-party liability insurance policy cannot avail this NCB benefit.

The NCB benefit starts accumulating from the first claim-free policy year and with each consecutive claim-free renewal. In some cases, it can reach up to 50% after 5 consecutive claim-free years. The discount applies only to the Own Damage (OD) premium and not to the mandatory third-party liability cover.

If a policyholder files a single claim during a policy year, the accumulated NCB is usually reset, unless they have an NCB protector rider, which allows them to file a specific number of claims without losing their accumulated discount.

Contrary to popular misconception, the NCB benefit belongs to the policyholder, and not the vehicle. This means you can transfer your accumulated NCB when purchasing another vehicle or switching to a different motor insurance provider. To transfer the NCB to a new insurer, you must provide an official NCB certificate or declaration issued by the previous insurance provider.

To ensure your NCB benefit is not lost or expired at renewal, you must renew your motor insurance policy on time or at least within the grace period.

Benefits of No Claim Bonus in Motor Insurance

The following are the benefits of the No Claim Bonus in a motor insurance policy.

Discount on Premium at Policy Renewal

If you don’t file any claims during a policy year, the insurance provider will offer a discount on the own damage premium portion at your motor insurance policy renewal. This discount increases yearly and can help you save significantly on your premium costs.

Transfer Accumulated NCB to Another Vehicle

Your NCB benefit belongs to you, not the vehicle. So if you buy a new vehicle, you can transfer your NCB benefit to the new vehicle.

Retain NCB When Changing Insurers

If you choose to change your motor insurance provider, you will not lose your NCB. You can port your accumulated NCB to the new insurance provider by presenting the necessary documents.

Encourages Safer Driving

NCB encourages policyholders to drive safely and maintain their vehicles to get a significant discount on premiums.

How to Calculate No-Claim Bonus

No Claim Bonus discount is calculated based on the number of consecutive claim-free years on your car insurance policy. If you do not make your own damage claim during a policy year, you are eligible for a higher discount when you renew your policy. The longer you go without making a claim, the higher the NCB discount.

Example:

Let’s say you have a motor insurance policy with an Own Damage premium of ₹15,000, and you have earned a 35% NCB. In that case, you get a discount of ₹5,250, and pay only ₹9,750 as your own damage premium.

NCB Progression Table: Year-Wise Discount Breakdown

The following is a breakdown of how your NCB discount would accumulate over the years.

Claim-Free Years	NCB Discount	OD Premium (Example: ₹15,000)	Premium Payable
0 at new policy	0%	₹15,000	₹15,000
1 year	20%	₹15,000	₹12,000
2 years	25%	₹15,000	₹11,250
3 years	35%	₹15,000	₹9,750
4 years	45%	₹15,000	₹8,250
5+ years	50%	₹15,000	₹7,500

Reason Why You Lose Your NCB in Motor Insurance?

The following are common reasons why most policyholders lose their accumulated NCB discount on their motor insurance.

Filing a Claim

If you make an Own Damage (OD) claim for your vehicle in the event of an accident, theft, or damage, your accumulated NCB discount will generally reset to zero.

Late Renewal

If you fail to renew your motor insurance policy within the grace period, usually 90 days, once your policy expires, you will lose all accrued NCB discount.

Incorrect Details

When switching your insurance provider, providing incorrect details or a fake NCB declaration, this may void your accumulated NCB discount.

Third-Party Only Policy

If you switch from a comprehensive motor insurance plan to a pure third-party liability cover, which does not offer an NCB benefit, you will lose your NCB discount.

Note: You can opt for the NCB Protector add-on, which allows you to make a limited number of claims without losing your NCB discount.

How to Transfer NCB From Old Vehicle to New Vehicle?

Here’s how you can transfer your NCB benefits from one vehicle to another.

Inform Insurance Provider

You must inform your motor insurance provider that you are selling your vehicle and want to retain your NCB.

Submit Sale Documents

Submit proof of sale, such as a delivery receipt, sale agreement, or official Regional Transport Office (RTO) documents like Forms 29 and 30, used to transfer the vehicle ownership, to your insurer.

Get the NCB Certificate

Request your insurer for a formal NCB Certificate or retention letter.

Apply for a New Policy

Buy a comprehensive or Own Damage insurance policy for the new vehicle.

Submit the Certificate

Provide the NCB certificate details and your previous policy number to your new insurance provider if you’re changing your insurance provider.

Premium Adjustment

The new insurer will verify the documentation and apply your accumulated NCB discount to the new own-damage premium.

No Claim Bonus vs Cumulative Bonus

Many policyholders often get confused between NCB in motor insurance and Cumulative Bonus in health insurance, using them interchangeably. Here are the key differences between NCB and Cumulative Bonus.

Feature	No Claim Bonus (NCB) in Motor Insurance	Cumulative Bonus (CB)
Primary Benefit	Gives a percentage discount on the Own Damage (OD) premium.	Traditionally increases the Sum Insured limit, especially in health insurance, but is rarely used in motor insurance.
Reward Type	Premium reduction (typically 20% to 50% over 5 claim-free years).	Increase in coverage amount without any additional premium.
Application	Applies only to the Own Damage (OD) premium component of a motor insurance policy.	Applies to the policy's coverage limit or Sum Insured.
Impact of a Claim	Usually resets to 0% after a claim is made (unless NCB Protection is available).	May reduce or stop the accumulation of future bonus additions, depending on the policy terms.

No Claim Bonus Protector Add-on

A No Claim Bonus (NCB) Protector add-on is an optional motor insurance cover that allows you to make claims without losing your accumulated NCB discounts. Without this rider, making a claim would reset your earned NCB discount to zero. MCB Protector rider allows you to make a specified number of claims during a policy year without resetting your NCB.

You can usually make one or two claims per year without losing your NCB discount. For an NCB Protector add-on, some insurers require you to have a minimum existing NCB level.

Common Misconceptions About No-Claim Bonus

The following are common misconceptions about NCB in motor insurance.

NCB Reduces Your Overall Insurance Premium

The No Claim Bonus applies only to the Own Damage (OD) premium. It does not reduce the third-party insurance premium in a comprehensive or Own Damage policy with Third Party Liability coverage.

You Lose Your NCB if You Change Insurance Companies

This is one of the most common misconceptions about NCB. Your NCB belongs to you, and can be transferred to a new insurer when you switch your policy.

NCB Belongs to the Vehicle

The NCB does not belong to the car or bike; it belongs to the policyholder and can be transferred to a new vehicle or insurer.

One Claim Always Wipes Out Your Accumulated NCB

While a claim can affect your NCB, some insurers offer an NCB Protect add-on that lets you keep your discount even after a limited number of claims.

NCB Keeps Increasing Every Year

Though the NCB discount increases with each non-claim year, the maximum No Claim Bonus you can earn is 50%, even if you continue to remain claim-free for more than five years.

A No Claim Bonus is one of the easiest ways to reduce your motor insurance premium. By driving safely and avoiding unnecessary Own Damage (OD) claims, you can earn a significant discount on your premium, which increases with every consecutive claim-free policy year, subject to the maximum limit. While the savings may seem small at first, they can add up over several years of policy renewals and help lower your long-term insurance costs.

Know that the NCB belongs to the policyholder, not the vehicle, meaning you can transfer it when you buy a new car or switch to another insurance provider, provided you present the NCB certificate or declaration.

FAQs

Can I get NCB benefits for third-party insurance?

No, NCB benefit is not applicable for third-party insurance. It can only be claimed on the own damage portion of a comprehensive or own damage standalone policy.

Can I transfer NCB to another company?

Yes, you can transfer your NCB to another company upon renewal when you switch to another insurer. However, you must provide the necessary documents to prove your claim-free record.

Can I transfer NCB to another car?

Yes, you can transfer NCB to another vehicle as it remains with the policyholder. Hence, when buying a new policy for your new car, you can transfer your NCB from your previous car.

Will my NCB be forfeited if I make a claim?

If you make your own damage claim, you may lose your accumulated NCB on your policy at the time of policy renewal. However, some insurers offer an NCB Protect add-on to retain a certain percentage of your NCB.

Is NCB available for bike insurance?

Yes, NCB is applicable for two-wheeler insurance as well. Just like car insurance, you earn a discount on your premium for consecutive claim-free years.

What happens to my NCB benefit if I make one claim?

If you make your own damage claim during the policy year, you may lose your accumulated NCB at renewal. However, an NCB Protect add-on may help you keep it in some cases.

Can NCB be transferred to family members?

NCB cannot be transferred to family members as it is linked to your insurance policy and claim history.

How is NCB calculated?

NCB is calculated as a discount on your Own Damage (OD) premium. You earn a discount on your own damage premium for every consecutive claim-free year up to a maximum of 50%

What is NCB protection?

NCB protection is an add-on cover that allows you to retain your No Claim Bonus even if you make a certain number of claims within a policy term. Depending on your insurer, some policies may reduce your NCB discount by a certain percentage after you make a claim.

About Author

Mariyam Sara

Sub-Editor

holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.