Knowledge Centre

No-Claim Bonus- Benefits and Understanding

While you think of how you can save on car insurance, then you should definitely know about the concept of no claim bonus that can actually help you pay less at the time of policy renewal. Wondering how? Read below to understand the importance of no claim bonus in car insurance.

First, let’s understand what is no claim bonus?

During the policy year, you drive safely and make no claims during that year. Hence, acknowledging the fact that you have made no claims in that year and are a safe driver, your insurance company rewards you with a discount on your own damage premium at the time of renewal. This no claim bonus discount  ranges from 20%-50% .

How is no claim bonus calculated?

If you do not make any claim for five consecutive years, your insurer will reward you with a discount of 50% on own damage premium at the time of policy renewal. However, even if you make a single claim, your no claim bonus will jump directly to zero and you will have to pay the required premium, without any discount.

Here is how the discount for no claim bonus is usually calculated.

Period of insurance

Percentage of discount on own damage premium

Preceding year


Preceding 2 consecutive years


Preceding 3 consecutive years


Preceding 4 consecutive years


Preceding 5 consecutive years


Benefits of No Claim Bonus

  • You get it as a reward: No claim bonus is a discount that you earn, something that your insurance company rewards you for practicing safe driving and not making any claim under the expiring policy.

  • NCB is transferable: In case if you sell your car and buy a new one, then you can easily transfer the NCB that you have earned till date. In this case, you will receive a NCB certificate from your insurer which is valid for 3 years from the date of issuance.Also, this NCB can be transferred if the type of vehicle is same i.e. private car to private car and not from private car to two wheeler. However, if you are not selling your car then, it is important you ensure that there is not a gap of more than 90 days from the policy expiry date and renewal date. If the gap is more than 90 days then, no claim bonus will become 0%.

  • Saves on the premium: Earning no claim bonus is one of the best ways to cut down on the car insurance renewal premium.

How to protect your no claim bonus?

Few insurance companies offer add on covers to protect your No Claim Bonus. Either the customer is able to move to a higher slab or the existing NCB is retained at the time of renewal. However, there is a capping on number of claims as well. (depending on the number allowed in a year by your insurance company).

In a nutshell

It is your responsibility as a driver to ensure you drive safely and it also ensures you save big on the renewal premium costs.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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