How No Claim Bonus Works (and the Ways People Lose It)

No Claim Bonus is the closest thing car insurance has to a loyalty reward, except it isn't loyalty to the insurer. It is a reward for you not making claims. Stay claim-free for five years and half of your own-damage premium disappears.

Here is the part most people get wrong. They protect their NCB for years and then lose it over a ₹6,000 bumper scratch, or because they renewed four months late. Or they sell their old car and never ask for the NCB certificate, throwing away a discount that would have saved them thousands on the new car. Let me walk you through how NCB actually works, so none of that happens to you.

How much NCB will I get?

It goes up one step for every claim-free year:

It never goes above 50%, however many years you stay claim-free. The new slab applies at the renewal right after the claim-free year. If you are not sure which slab you should be on, the NCB calculator works it out from your current NCB.

Why didn't my total premium halve at 50% NCB?

Because NCB only discounts the own-damage part of your premium. The third-party premium, add-ons, personal accident cover and GST are not touched by NCB at all.

On a typical small car, own damage might be only half of the total bill, so 50% NCB cuts the total by roughly 25% to 35%. Still a lot of money, just not half.

What makes me lose NCB?

Only a few things, and it is worth knowing exactly which:

• Making an own-damage claim in the policy year. One claim takes you back to 0% at the next renewal, whatever the size of the claim.
• Renewing more than 90 days after expiry. After 90 days, the NCB lapses completely, even if you never made a claim.
• Switching to third-party-only cover. NCB only exists on own-damage cover. If you drop own damage, there is nothing for the NCB to discount, and you can't build it up.

Does a third-party claim against me reduce my NCB?

The general rule is that NCB is lost when a claim is made under your own-damage cover. If someone else's insurer pays for your car's damage because they were at fault, your NCB isn't touched. When a third party claims against your policy for damage you caused to them, insurers treat it differently. Read the NCB clause in your own policy wording, or ask your insurer to confirm in writing before you assume.

Is it worth losing NCB for a small claim?

Usually not, and this is the most expensive mistake I see. When you claim, you don't just lose NCB at the next renewal. NCB climbs back one step a year, so you pay more for up to five renewals.

Here is a real example. A driver at 35% NCB has an own-damage premium of ₹15,000 before NCB. A ₹9,000 repair would pay out about ₹6,500 after depreciation and the deductible. Claiming would cost them about ₹17,700 in extra premium over the next three renewals. That is a bad trade.

Run your own numbers in the claim or pay yourself calculator before you call the insurer.

What happens to my NCB when I sell my car?

The policy goes to the buyer, but the NCB stays with you. NCB belongs to the policyholder, not the car. This is the part people forget:

1. When you sell, give the buyer the policy transfer (or cancel your policy, if the buyer is getting their own).
2. Ask your insurer for an NCB certificate, sometimes called an NCB retention letter. You'll usually need the sale proof, like Form 29 and Form 30 or the delivery note.
3. Use that certificate when you insure your next car.

At 50% NCB on a new car's own-damage premium, that one letter can save you ₹10,000 or more in the first year.

How long is the NCB certificate valid?

This varies by insurer, and the sources don't agree. Three years from the old policy's expiry is the most common rule, but some insurers apply shorter windows. Check the validity printed on your certificate. If you plan to buy your next car after a gap, ask your insurer before you sell.

Can I transfer NCB to my spouse or children?

Generally no, because NCB belongs to the named policyholder. The main exception is when the policyholder dies: the NCB can usually pass to the legal heir who inherits the car. If you are moving the car into a family member's name while you are alive, expect the NCB to reset for them.

Do I keep my NCB if I switch insurers?

Yes. NCB is portable between insurers. The new company will ask for your previous policy copy and may check your claim history through industry records. Don't declare a higher NCB than you have earned. If it is discovered at claim time, the insurer can reject the claim or recover the difference.

My policy expired last month. Is my NCB gone?

Not if you renew within 90 days of expiry. You keep the NCB, but you have been driving uninsured during the gap, which is illegal and leaves you personally liable for any accident. The insurer may also ask for a fresh inspection of the car before issuing the policy. Renew as soon as you can.

Is NCB protection worth buying?

The NCB protection add-on lets you make a limited number of claims, usually one or two a year, without your NCB resetting. Whether it pays depends on how big your NCB is in rupees.

At 0% or 20% there is little to protect. At 35% to 50% on a car with a sizeable own-damage premium, the add-on often pays for itself after one small claim. Look at the rupee saving shown in the NCB calculator and compare it with the add-on price in your quote.

One catch: NCB protection keeps your slab, but some insurers still raise your premium after claims. It protects the discount, not your claim record.

I bought a second car. Can both cars use my NCB?

No. NCB is earned on one policy and used on one policy. If you keep your old car and buy a new one, the old car's policy keeps its NCB and the new car starts at 0%. You can only move the NCB to the new car if you sell the old one, or stop insuring it, and use the NCB certificate on the new car. People sometimes try to claim it on both. Insurers check, and it doesn't work.

My claim was rejected. Do I still lose NCB?

If no money was paid out on the claim, most insurers don't treat it as a claim for NCB purposes, and you keep your slab. But get this confirmed in writing at the time of rejection. Some insurers record a "claim intimation" in their system, and it can wrongly show up as a claim when you switch companies. A short email from the insurer saying "no claim was paid" saves an argument later.

What if I inform the insurer about an accident but don't claim?

Informing the insurer is not the same as claiming. If you report an accident, which you should do when a third party or injury is involved, and then pay your own repairs without asking for money, your NCB should stay intact. Tell them clearly that you are not claiming, and ask them to close the intimation without payment.

How do I check that my NCB is correct on the renewal notice?

Open last year's schedule. If it shows 25% and you made no claim, your renewal should show 35%. If it doesn't, ask the insurer to correct it before you pay. This is one of the most common errors on renewal notices, and fixing it after payment is much harder.