NCB in Car Insurance – Explained

NCB in Car Insurance - BimaBandhu

For almost every individual, saving a small amount of money while purchasing indispensable items in life does feel rewarding and exciting. The same holds true when you buy car insurance to protect your personal vehicle. While most people know that they can save money by comparing car insurance, not everyone knows well about the No Claim Bonus or NCB in car insurance and how it helps save money.

You might not know that India was the fifth largest auto market in the world in the year 2020. For every car owner, buying car insurance is mandatory. The good news for you is – most car insurance companies provide NCB benefits to their policyholders.

If you want to know all about NCB, this comprehensive guide to NCB in car insurance is meant for you.

What is NCB in Car Insurance?

NCB is a reward you can receive from your car insurance provider if you do not file any claim during a policy year. In simpler words, your insurance company rewards you for being a responsible car driver/owner with NCB protection. 

Since you need to renew your car insurance every year, you can avail of NCB in car insurance at the time of policy renewal. Under this reward, you can get a premium discount of up to 50%.

Wondering how you can avail of maximum NCB in car insurance renewal? Continue reading.

NCB in Car Insurance – How Does It Work?

Before you ask your insurer about NCB in car insurance, you must know this –

The primary reason behind car insurance claims is the damages that happen due to road accidents. Not filing any claim during the policy year also means that you have driven the car safely and have done all that is possible to keep it secure. NCB in car insurance can be considered a reward for being a responsible driver.

At the time of car insurance renewal, you will get a discount on the ‘own damage’ component of your insurance premium. This NCB discount in car insurance generally starts from 20% for the first claim-free year and gets accumulated for every subsequent claim-free year (next five).

The maximum capping to NCB in car insurance is 50%, which you can get after five consecutive claim-free years. Since own damage insurance covers a major proportion of the total insurance premium, NCB in car insurance can help you save a substantial amount in the long run.

What are the Benefits of NCB?

Now that you know how NCB works in relation to car insurance, let’s look at its primary benefits:

  • NCB in car insurance encourages individuals to become safe, responsible drivers.
  • Substantial savings between 20-50% on your next insurance premiums
  • Easy to transfer NCB in case you switch from the current insurance to another

You should also know that NCB in car insurance is related to you (the car owner), not your car. It means that if you want to sell your car, the accumulated NCB stays with you and is applicable to the next car you buy. It does not get transferred to the new owner after you sell your car.

How is NCB Calculated for Car Insurance?

NCB in car insurance is calculated based on the insurance premium payable during the second policy term at the time of renewal. It generally begins with a 20% discount on the payable premium and increases with each consecutive claim-free year afterwards. 

As stated above, NCB is related to the own damage component of the insurance premium, not the third-party insurance premium component. The following table details the increase in NCB percentage in car insurance as time passes:

Claim Free Year

NCB in Car Insurance

After the first claim free year


After second claim free year


After third claim free year


After fourth claim free year


After fifth claim free year


For more details specific to your car insurance policy, you can contact the chosen insurance company.

The following example will help you understand how NCB in car insurance is calculated:

Mr. Shah needs to pay a car insurance premium of Rs. 10,000, out of which the own damage component is Rs. 8,000. If he hasn’t filed any claim for the last five years, this own damage insurance premium will become Rs. 4,000 after availing 50% discount.

Also Read: All About Electric Car Insurance

How to Transfer NCB in Car Insurance?

Since NCB in car insurance is related to the car owner and not the car itself, you can get it transferred from your old car to the new one. Follow the steps given below:

  • Submit an NCB transfer request with your current insurer
  • Ask for an NCB certificate from the insurer
  • Buy a new car insurance policy and provide the NCB certificate details.
  • The new insurer will transfer the NCB after verifying the given details.

Documents Required for NCB Transfer

  • Old car’s insurance policy copy
  • A copy of the delivery note received on selling the old car
  • Copy of the booking form received while buying the new car

What is NCB Calculator?

As a car owner, you would want to know the exact amount you can save under NCB in car insurance. For this, you will need an NCB calculator – an online tool accessible on the official websites of insurance companies to help policyholders calculate NCB amount.

Wondering how to check NCB in car insurance? You can use an online NCB calculator to get a fair idea about it.

Recommended Read: All About Motor Insurance

Important Things to Know About NCB

  • In case of a car accident resulting in minor damages to your car, you can choose to skip filing a claim for the same and pay for the repairs out of pocket. This will help you benefit from NCB in car insurance for the claim-free year. However, if you feel that the car insurance repair cost is quite high, you can choose to file a claim and benefit from the policy you have purchased.
  • NCB in car insurance gets terminated if you file a claim for any reason during the policy tenure. Besides this, NCB may also get terminated in case you do not renew the car insurance policy within 90 days from its expiry date. 
  • You do not lose NCB in car insurance on buying a new car.
  • NCB is calculated only on the own damage component in your insurance policy, and not on the entire premium amount.

FAQs related to NCB in Car Insurance

  • What is previous NCB in vehicle insurance?

As the name suggests, previous NCB refers to the NCB you have accumulated on your old car which you have either sold or are planning to sell. You can get this NCB transferred to your new car after purchase.

  • When does NCB get canceled in car insurance?

NCB in car insurance gets canceled in case you file a claim within the policy tenure or fail to renew it within 90 days from its date of expiry.

  • Does changing an insurance company affect NCB in car insurance?

Changing the insurance provider does not affect the NCB. It is transferable from one insurance company to another.

  • Will I lose the existing NCB on buying a new car?

NCB in car insurance is tied to you (the car owner), not your car. Hence, you will not lose it on selling the old car or buying a new one.

  • Is NCB in car insurance calculated on the entire premium?

NCB is calculated only on the own damage component of the insurance premium. 

  • What will happen on declaring an incorrect NCB?

Declaring an incorrect NCB may lead to loss of total NCB accumulated. 

  • Does NCB impact car insurance premiums?

Since NCB in car insurance makes you eligible for a discount on the premium, it will help save money during the policy renewal process.

  • Is NCB applicable to third-party car insurance?

NCB does not cover the premium portion that is meant for third-party liability coverage (which accounts for 15-20% in general).

  • Is NCB in car insurance an add-on?

NCB is not an add-on but a reward you can get during car insurance renewal for every claim-free year.

  • Do you lose  NCB if you stop driving your car?

You do not lose NCB if you stop driving but will lose it after filing a claim.


You May Also Like