No Claim Bonus

What is No Claim Bonus?

If you don’t make any insurance claim during the policy period, you get a discount on your next premium.The discount starts at 20% after the first claim-free year and can go up to 50% after five consecutive claim-free years (as per IRDAI rules).

Key Features of NCB

Applicable Only on Own Damage Premium

• NCB discount applies only to the Own Damage (OD) component of your comprehensive policy
• Not applicable on Third Party liability premium, which is mandated by law and remains fixed

Transferable Benefit

• NCB is linked to the policyholder, not the vehicle
• Can be transferred when switching insurance companies
• Can be transferred to a new vehicle purchased by the same owner, Most people miss this benefit while purchasing a new vehicle and they go by the dealer's choice and end up buying a costlier insurance.

Calculation Example

If your total premium is Rs. 10,000 with:

• Own Damage premium: Rs. 6,000
• Third Party premium: Rs. 4,000

With 3 years of claim-free record (35% NCB):

• Discount = 35% of Rs. 6,000 = Rs. 2,100
• New renewal premium = Rs. 10,000 - Rs. 2,100 = Rs. 7,900

Important Rules and Conditions

NCB Reset Conditions

• Making any claim resets NCB to zero
• Must maintain consecutive claim-free years to accumulate higher discounts
• Policy lapse beyond grace period (typically 90 days) results in NCB loss

Maximum Cap

• NCB cannot exceed 50% even after more than 5 claim-free years
• This is the regulatory maximum set by IRDAI

Policy Type Restrictions

• Available only with comprehensive motor insurance policies
• Not available with standalone Third Party insurance

NCB Transfer Process

When Switching Insurers:

1. Contact your current insurer to request NCB certificate
2. Provide policy details, RC copy, and valid photo ID
3. Submit the NCB certificate to your new insurer during renewal

Online Transfer:

• Share previous policy number and NCB details with new insurer
• The new insurer verifies and transfers the NCB automatically

NCB Protection Add-On

Many insurers offer "NCB Protect" add-on that:

• Allows you to retain NCB even after making limited claims (usually 1-2 claims)
• Involves a slight increase in premium for this protection
• Recommended for policyholders with NCB above 25%

Benefits of NCB

Financial Savings

• Potential savings of up to ₹40,000 annually on premiums for high-value vehicles
• Significant long-term cost reduction over 5 years

Promotes Safe Driving

• Encourages policyholders to drive carefully and avoid minor accidents
• Creates financial incentive for maintaining vehicles properly

Flexibility

• Easy transfer between insurers and vehicles
• Retained even when purchasing new vehicles

Things to Remember

Documentation Required for Transfer:

• Previous policy copy
• NCB certificate from current insurer
• Vehicle Registration Certificate (RC)
• Valid identity proof

Grace Period:

• Most insurers provide 90-day grace period for policy renewal without losing NCB
• Beyond this period, accumulated NCB is forfeited

Claim Strategy:

• For minor damages, consider paying out-of-pocket to preserve NCB
• Calculate if repair cost exceeds potential NCB savings over time
• Reach out to your Insurance Intermediary to find out cost-benefit analysis. (Claim vs Out-of-pocket, which one is better)

Recent Regulatory Updates

• IRDAI standardization ensures uniform NCB rates across all insurers
• Digital NCB certificates now available for faster transfers
• Enhanced verification systems to prevent NCB fraud

Tips to Maximize NCB Benefits

1. Avoid filing claims for minor damages between Rs. 5,000-10,000
2. Maintain comprehensive records of your claim-free years
3. Renew policies on time to avoid losing accumulated NCB
4. Consider NCB Protection add-on for valuable NCB percentages
5. Shop around during renewal while ensuring NCB transfer

NCB represents one of the most valuable benefits in motor insurance, potentially saving thousands of rupees annually while promoting safer driving habits. Understanding its mechanics and maximizing its benefits is crucial for every vehicle owner in India.

Regards,

Honvest Team.