NCB in Motor Insurance: How It Works

No Claim Bonus (NCB) in motor insurance is a discount on the own-damage (OD) premium component for claim-free years and is one of the most significant premium reduction mechanisms available to vehicle owners. The NCB scale under IRDAI regulations is fixed: 20% discount after the 1st claim-free year, 25% after the 2nd, 35% after the 3rd, 45% after the 4th, and 50% after the 5th consecutive claim-free year. Once you reach 50% NCB, it remains at that level as long as you continue claim-free renewals.

An important distinction: NCB applies only to the own-damage (OD) component of your premium, not the third-party premium (which is fixed by IRDAI). Since OD premium is typically 60-70% of the total comprehensive premium, a 50% NCB effectively reduces your total premium by 30-35%. NCB is linked to the vehicle owner, not the vehicle.

When you sell your car and buy a new one, your NCB transfers to the new vehicle — get an NCB certificate from your insurer before the transfer. When you switch insurers, your NCB also transfers — again, obtain a certificate from your outgoing insurer. Making any own-damage claim resets your NCB to zero at the next renewal.

Third-party only claims do not affect NCB. The NCB Protect add-on, available at an additional cost from most insurers, allows one own-damage claim per policy year without resetting your NCB — this is particularly valuable if you've built 35%+ NCB. For minor damages, consider whether the repair cost exceeds the NCB benefit you would lose before making a claim — sometimes self-paying small repairs preserves more long-term value through retained NCB.