What is NCB in Insurance? Meaning, Benefits & Working Explained

No Claims Bonus (NCB) is a reward insurance companies give to policyholders who don’t file any claims during the policy period. It offers a discount on the renewal premium, encouraging safe and responsible driving.

Let’s take Riya as an example. She has a car insurance policy. For five straight years, she hasn’t made any claims. As a result, her insurer gives her increasing discounts on her renewal premium each year.
 

This example shows how Riya’s careful driving helps her earn bigger discounts through NCB year after year.

By not claiming, Riya saves money each year. NCB is transferable and can move with her if she switches vehicles or insurers.

How Does NCB Work? 

The No Claims Bonus (NCB) is a structured reward system that offers discounts to policyholders who do not make any insurance claims during the policy year. Let’s understand how this smart little reward called No Claims Bonus (NCB) works in car insurance.

If you don’t make any insurance claims for a whole year, your insurance company rewards you with a discount on your next premium! This reward grows every year if you keep driving safely.

Here’s how NCB grows each year:

But wait, some rules you should know:
 

• NCB is only for your damage part of the premium, not the third-party part.
   
• If you make a claim, you may lose your bonus.
   
• Even for small damages (like a tyre burst), you can pay from your pocket to keep your NCB safe!

The No Claims Bonus (NCB) is a reward that offers a discount on your damage premium if you don’t make any claims during the policy year.

Example 1: Ms. Reddy’s NCB Savings:

Ms. Reddy pays an annual premium of ₹24,000, of which ₹21,000 is for own damage cover. She hasn’t made any claims for four straight years, so she gets a 45% NCB.

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Let’s calculate her discount:
 

She saves ₹9,450 just by being a careful driver and not claiming insurance.

Example 2: Why Mr. Chandran Skipped Claiming:

A tree branch caused damage to Mr. Chandran’s car, and repairs cost ₹5,800.
But if he claimed insurance, his deductible would be ₹6,500.
 

If he had claimed insurance, the deductible of ₹6,500 would be more than the actual repair cost. So, he wouldn’t receive any payout and would also lose his No Claims Bonus. That’s why he chose to pay from his pocket.

This shows how smart decisions can help you save more in the long run with NCB.

When Does NCB Get Terminated?

You can lose your No Claims Bonus (NCB) in the following cases:

1. If you make an insurance claim, once a claim is made, your NCB gets reset, and you lose the discount at the next renewal.
    
2. If you don’t renew your policy within 90 days, if your policy expires and you delay the renewal by more than 90 days, the NCB will no longer apply.

To keep your NCB safe, avoid unnecessary claims and always renew your policy on time.

Benefits of Having a No Claims Bonus (NCB)

A No Claims Bonus offers several helpful advantages that can save you money and reward safe driving. Let’s look at the key benefits in a simple table:
 

By driving safely and avoiding claims, you can build up a strong NCB and enjoy long-term savings and peace of mind.

How to Transfer Your No Claims Bonus with Ease?

Your No Claims Bonus (NCB) belongs to you, not your car. So when you buy a new vehicle or change your insurance provider, you can transfer your NCB, as long as the new vehicle is in the same category (e.g., private car to private car).

Transferring NCB When You Buy a New Car:
 

• Your NCB stays with you, even if you sell your old car.
   
• The insurance policy may go to the new owner, but NCB does not.
   
• You can apply your NCB to the insurance policy for your new car and enjoy continued premium discounts.

Transferring NCB to a New Insurer:

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If you change insurers at renewal time:

• Tell your new insurer about your existing NCB, and give them your previous policy or renewal notice showing your NCB.
   
• If buying insurance online, a self-declaration may be enough.
   
• The insurer will verify and transfer your NCB automatically.

Steps for Offline or Agent-Assisted Transfer:
 

1. Contact your old insurer and request an NCB transfer.
    
2. Provide documents like Forms 29 and 30 and a letter requesting the NCB certificate.
    
3. Receive the NCB certificate from your previous insurer.
    
4. Submit it to your new insurer to finalise the transfer.

Whether you go online or use an agent, transferring your NCB is simple, and it helps you keep the rewards you've earned over the years.

Documents You Need to Transfer Your No Claims Bonus (NCB)

To transfer your No Claims Bonus to a new policy or vehicle, you must provide the following documents:

• A written transfer application
   
• The original NCB certificate
   
• A photocopy of your previous insurance policy
   
• Forms 29 and 30, which act as the buyer-seller agreement
   
• A copy of the vehicle delivery note
   
• A photocopy of the booking receipt
   
• An Ownership Transfer Certificate

These documents help your insurer verify your NCB and complete the transfer smoothly.

Important Note:
You cannot transfer your NCB to another person. However, if the original policyholder passes away, the NCB can be transferred to their legal heir, provided this is done within 90 days of transferring the vehicle ownership.

Conclusion

The No Claims Bonus (NCB) is a valuable reward for safe and responsible driving. It helps you lower your insurance premiums year after year. When you avoid making claims and renew your policy on time, your NCB grows steadily. You can even carry it forward if you change your insurer or vehicle. 

Many people don’t realise how much they can save just by protecting their NCB. With options like NCB Protection Cover, you can make small claims without losing this benefit. So, drive carefully, renew on time, and make the most of your NCB.

FAQ’s

1. Can I lose my NCB if I forget to renew on time?
Yes, if you don’t renew your policy within 90 days of expiry, you’ll lose your NCB. Always renew before the due date to keep your bonus.

2. Does one small claim end my NCB?
Yes, even a small claim can reset your NCB to zero—unless you have an NCB Protection Cover added to your policy.

3. Can I transfer NCB to a new insurer?
Yes, you can transfer your NCB when you switch insurance companies. Just show your NCB certificate during the new policy purchase.

4. Is NCB linked to my car or to me?
NCB is linked to the policyholder, not the car. You can carry it forward even if you sell your old vehicle and buy a new one.

5. Can I use my NCB on two cars at once?
No, you can’t use the same NCB on two cars at the same time. It applies to one active policy under your name.

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