Published On: Mon, Aug 20th, 2018

Everything you need to know about “No Claim Bonus in Car Insurance”

As per the Motor Vehicles Act of 1988, it is mandatory for all the vehicles to be covered under an insurance policybefore one can drive it on a public road. Hence, you need to get your car insured compulsorily by law. The minimum type of car insurance policy a vehicle must have is third-party liability insurance. A third-party liability plan covers the liabilities that arise if your vehicle gets into an accident,andthe third party is found injured or the property of the third-party is damaged.

Everything you need to know about “No Claim Bonus in Car Insurance”

A No Claim Bonus is an important aspect in a car insurance policy. It is a benefit provided by the insurance provider to the policyholder for driving safe and not getting involved in any accident. It ensures a discount on the premium of the car. Let us get to know more about it.

What is No Claim Bonus?

No Claim Bonus is a discount offered by the insurance provider to the policyholder for not making any claims during the term of the policy. By raising nilclaimsover the years, one can accumulate the NCB and get the discount from 20% up to 50% on the premium.

NCB is transferrable. It implies that if the policyholder buys a new vehicle, the NCB can get transferred to his new vehicle, and the benefit of NCB will continue.The benefits of NCB include:

• It is transferrable
• Lowers the premium
• In the case of change of insurer also, NCB can be transferredusing a renewal notice or a letter from the previous insurer that confirms the NCB.

It is also important to know that NCB is only applicable on the Own Damage premium of a car insurance policy. If you have only third-party insurance liability, you will not get the No Claim Bonus.

NCBdiscount over premium

The insurance company provides NCB discounts in increasing proportion on the premium for every year, where not a single claim is made in any year. All the insurance companies provide almost the same NCB slab. Usually, the NCB starts with a 20% discount in the second year, and this discount can go to a maximum of 50% in six consecutive years.

Look at the table below to know the general NCB discount offered year on year:

Claim free years Discount
1 20%
2 25%
3 35%
4 45%
5 50%

As you can see, the No Claim Bonus starts with a 20% discount for the second claim free year, 25% for the third claim free year, 35% for the fourth claim free year, 45% for the fifth claim free year, and 50% for the sixth claim free year. Though it may change with the insurer, but most of them stick to this slab.You can also learn more about motor insurance online.

How does NCB help with the Premium?

There are different ways to reduce the premium amount of your car insurance. A no-claim bonus is undoubtedly the best and the most effective way to reduce one’s own-damage premium and that too up to 50%.The premium cost comes down when you are able to accumulate theNoclaim bonuses, but you must be aware of the policies of your respective car insurance company to know the exact terms.So, with NCB, you can avail coverage with car insurance premiumat a lower price.

No insurance provider likes to let their customers migrate to a different insurer, hence as a way of retention, companies offer benefits like No Claim Bonus to their existing customers. If you want to reduce your cost of premium, then it is recommended that you keep yourself disciplined, and drive your vehicle carefully on the road to avoid any accidents and hence avoid raising any claim. You can avail the benefit of NCB from the second year of your policy.

Here are some ways in which you cansave your insurance premium through NCB:

Get the certificate of NCB: If you are selling your carand buying a new one, always get the delivery note copy. This copy needs to be given to your car insurance company. Only then will the company give you the NCB certificate, which you can use in three years of time to save premium on the insurance of your car.
On the new car insurance policy: You can avail the NCB discount on your new insurance policy to save on the premium. Just give your NCB certificate to the car dealer and availpremium discounts on your new car insurance policy.

Same Insurance Company: If you wish to continue with the same car insurance company, then also you can get no-claim bonus benefit on your new car. You will have to provide the receipt and the chassis number of your new car along with other details to your insurance company. The insurer will then offer you reduced premium.

Don’t claim small amounts:If there is a small wear and tear of lesser amount, then it is advisable that you bear the expenses out of your ownpocket. You should prefer not to claim small amounts from your insurance provider. Because just for a small amount, you may end up losing your NCB and you will not see a reduction in your premium amount over the years.

While the NCB cannot be transferred from one person to the other, it is allowed for a legal heir in case he/she inherits the car on the policyholder’s death. Since the policy is applicable for the car, once the ownership of the car is passed on to the heir, the policy along with the applicable NCB for that particular car also gets transferred to the legal heir.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade. He can be contacted at

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