What Is NCB in Car Insurance?
No-Claim Bonus (NCB) in motor insurance is a discount on the Own Damage (OD) premium rewarded to policyholders who do not make any claim during a policy year. NCB is the most valuable reward in motor insurance — accumulated over 5 years, it can reduce your OD premium by 50%, significantly lowering the total annual insurance cost.
NCB Accumulation Schedule
IRDAI has standardised NCB rates across all motor insurers:
| Consecutive Claim-Free Years | NCB Discount on OD Premium |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5 years and above | 50% |
NCB is calculated on the Own Damage portion only — not on Third Party premium (which is fixed by IRDAI regardless of claims).
NCB Example
If your OD premium is ₹12,000/year after 5 claim-free years with 50% NCB:
- Premium without NCB: ₹24,000
- NCB discount: ₹12,000 (50%)
- Premium payable: ₹12,000
Over the lifetime of the vehicle, NCB saves tens of thousands of rupees.
NCB Reset on Claims
If you make a claim in any policy year, your NCB resets to zero. You restart the 5-year accumulation from scratch. This is why deciding whether to claim for small damages requires careful calculation — is the claim amount worth losing your accumulated NCB?
Rule of thumb: If the claim amount is less than what you'd pay in NCB premium discount over the next 2–3 years, repair out of pocket.
Transferring NCB When Changing Insurer
NCB belongs to the policyholder, not the vehicle. When you change insurers at renewal:
- Request an NCB retention certificate from your current insurer
- Submit it to the new insurer when buying the new policy
- The new insurer must honour the stated NCB percentage
When you sell your car: NCB transfers to your next vehicle — not to the new owner of your old car.
NCB and Third-Party Claims
Filing a third-party (liability) claim does NOT affect NCB. NCB only resets when you claim on your Own Damage cover. If a third party damages your car and you claim on their TP insurance (not your own OD), your NCB is unaffected.
NCB Protect Add-On: Is It Worth It?
NCB Protect is an add-on that allows one OD claim per policy year without resetting your NCB. It is particularly valuable when you have accumulated significant NCB (35–50%).
Cost: Approximately ₹500–₹2,000/year depending on the car value and insurer.
When it's worth it:
- You have 4–5 years of NCB (45–50%)
- Your NCB saves you ₹6,000–₹12,000/year
- Spending ₹1,500 to protect ₹10,000 annual NCB value is excellent insurance-on-insurance
When it's not worth it: If you have only 1–2 years NCB (20–25%), the NCB value is smaller and NCB protect is less cost-effective.
NCB After a Total Loss or Theft
If your car is declared a total loss or stolen, the insurer settles the IDV claim — and your NCB is reset. NCB Protect does not cover total loss scenarios in most policies. A new vehicle means restarting NCB accumulation from zero (unless you have an NCB retention certificate from the old vehicle).
Practical Tips to Maximise NCB
- Always compare whether a claim is worth making before calling the insurer for minor damages
- Add NCB Protect when you reach 3+ years NCB
- Request the NCB certificate in writing at every renewal — keep it safe
- When switching insurers, submit the NCB certificate in advance — delays can cause disputes
- Avoid the common mistake of using a new car's NCB from a sold vehicle — it belongs to YOU, follow the transfer process