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-calculated-in-motor-insurance.jpeg&w=1920&q=75 "How Is No Claim Bonus (NCB) Calculated in Motor Insurance?")
If you already have motor insurance for your car or a bike, you may have heard about No Claim Bonus (NCB). But do you really know how it works and how it is calculated? NCB is a reward from your insurance company for driving safely and not making any claims during your policy year.
Getting NCB means you pay less on your insurance renewal, so it is one of the smartest ways to save money on motor insurance, especially as repair costs and premiums keep rising. In this blog, we will explain how NCB is calculated in simple steps and how you can make the best use of this benefit.
How Is No Claim Bonus Calculated?
The No Claim Bonus starts in the second year of your insurance policy. If you do not make any claim in the first year, the insurance company gives you a 20% discount on your premium at the time of renewal.
Each year you continue without making a claim, this discount increases. It can grow for up to 5 years in a row. To understand how the No Claim Bonus increases each year, check the table below:
| Policy Year (No Claim Period) | NCB Percentage |
|---|---|
| After 1 year with no claim | 20% |
| After 2 consecutive years with no claim | 25% |
| After 3 consecutive years with no claim | 35% |
| After 4 consecutive years with no claim | 45% |
| After 5 consecutive years with no claim | 50% |
Benefits of NCB in Motor Insurance
No Claim Bonus (NCB) gives these benefits to people who have motor insurance:
- Renewal Discounts NCB gives you a discount when you renew your vehicle insurance. After 5 years of no claims, you can save up to 50% on your own damage premium.
- Transferable NCB belongs to you, the policyholder, not the vehicle. So, you can transfer your NCB if you buy a new vehicle or change your insurance company.
- Encourages Safe Driving Insurance companies give NCB to reward safe and careful driving.
When Does the No Claim Bonus (NCB) Get Cancelled?
Your No Claim Bonus will not apply in the following situations:
- If you make an Own Damage claim during the policy year, your NCB will reset to 0% at renewal (unless NCB Protection add-on is active). Third-party claims do not affect NCB.
- If you miss renewing your motor insurance within the given grace period (if any) after expiry, the insurer will cancel your NCB.
- If the policy is not renewed within the permissible period (90 Days) the accumulated NCB may be forfeited.
- When you buy a new vehicle or switch insurance companies, you must transfer your NCB on time. If you don't, the bonus will be lost.
- Without NCB Protection, even one small claim can remove your NCB benefits.
Tip: If you have an NCB Protection add-on, your No Claim Bonus will not be cancelled even if you make a claim.
Now, let's know more about this add-on:
How Can You Protect Your No Claim Bonus?
NCB Protection Cover helps you keep your No Claim Bonus even if you make a claim. To get this benefit, you need to pay a small extra amount with your insurance premium.
With this add-on, your NCB will not be removed after a small claim for, for example, minor repairs or windshield damage, and more. This means you can still enjoy a lower premium at renewal. Many people choose this cover because it helps them save money in the long run. From the second year onwards, you can get lower premiums and eventually save up to 50% on your insurance.
What Happens to Your NCB if Your Vehicle is in an Accident or Stolen?
1 NCB in Case of an Accident
- If you file a claim after an accident, you can lose part or all of your No Claim Bonus.
- If the insurance company can recover most of the repair cost from the other driver at fault, your NCB may remain safe.
- If it's not clear who is at fault, or a third party is involved, the NCB can be partially affected.
2 NCB in Case of a Stolen Vehicle
- If your vehicle is stolen, the insurer pays you the insured amount.
- Normally, since there's no other party to recover money from, your NCB might be lost, unless transferred to a new vehicle.
Note: The exact rules depend on the insurer and whether you have NCB Protection Cover.
Terms and Conditions for No Claim Bonus (NCB)
If you want to use your NCB, keep these points in mind:
- Transferring to a New Vehicle When you sell your old vehicle and buy a new one, make sure to transfer your NCB to the new vehicle. The insurance company will give you a certificate for this transfer.
- NCB Only with Own Damage Cover You cannot use NCB with third-party insurance. It is available only with a comprehensive or own-damage insurance policy.
Conclusion
No Claim Bonus (NCB) is a smart way to save money on your motor insurance. It rewards you for driving safely and not making claims during the policy year. By staying claim-free, your discount can grow from 20% in the second year to 50% after five years, helping you pay much less when renewing your policy.
Remember, NCB only works with your own damage or comprehensive insurance, and you can transfer it to a new vehicle if needed. Understanding NCB and using it wisely can make your motor insurance cheaper and smarter.
FAQs
NCB is a discount given by the insurance company when you do not make any claim during your insurance year. It helps you save money when you renew your policy.
Yes, if you make a claim, your NCB may be lost. Also, if you don’t renew your insurance on time or let your policy lapse, you will lose your NCB.
Yes, NCB belongs to you, not the vehicle. You can transfer it when you buy a new vehicle or change your insurer.
No, NCB is only for your own damage or comprehensive insurance, not for third-party insurance.
It is an add-on you can buy to keep your NCB even if you make a small claim. It helps you save money on renewals.
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