No Claim Bonus in Motor Insurance
A discount on own damage premium for each claim-free year. It belongs to you, not your car.
A no claim bonus (NCB) is a discount on the own damage premium at renewal for every claim-free year. It rewards careful drivers and also cuts the number of small claims, because an owner thinks twice before claiming ₹6,000 for a dent and losing a 35% discount.
NCB applies only to the own damage part of the premium. The third-party premium is prescribed by the Central Government and earns no NCB.
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The Tariff-Era NCB Slab
This is the scale from the India Motor Tariff, which the courseware teaches. After the 2024 product regime each insurer's filed product sets its NCB terms, and an insurer may keep this scale.
| Claim-free policy years | NCB on own damage premium |
|---|---|
| 1 year | 20% |
| 2 consecutive years | 25% |
| 3 consecutive years | 35% |
| 4 consecutive years | 45% |
| 5 consecutive years or more | 50% |
The Rules That Get Tested
- check_circleOne claim in a policy year wipes out the accumulated NCB at the next renewal. The owner starts earning it again from zero.
- check_circleNCB belongs to the insured person, not to the vehicle. When you sell your car and buy a new one, the NCB moves with you to the new vehicle of the same class.
- check_circleThe buyer of a used vehicle does not inherit the seller's NCB. When the policy is transferred to the buyer, the insurer recovers the NCB portion of the premium for the remaining period.
- check_circleUnder the tariff rules, NCB was kept if the policy was renewed within 90 days of expiry; beyond that it was lost. Check the insurer's product terms for its current window.
- check_circleNCB can be carried to a new insurer at renewal, on the evidence of the previous policy and a claim-free declaration.
- check_circleAn NCB protection add-on, where an insurer offers one, lets a limited number of claims be made without losing the discount. It is priced separately.
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Worked Example
A Pune car owner's own damage premium before discount is ₹18,000 and she has three claim-free years, so her NCB is 35%. She pays ₹18,000 less ₹6,300 = ₹11,700 for own damage, plus the TP premium in full. A scrape costing ₹8,000 to fix happens. If she claims, she loses ₹6,300 of discount next year and starts again at zero, so on a tariff-style scale a small claim can cost more than it pays. That is the arithmetic every motor claims desk explains.
How IC-11 Tests This
Expect the slab (what NCB after three claim-free years), what happens to NCB after a claim (all of it is lost, but can be earned again), and whether NCB goes with the car or the owner (the owner). The trap is applying NCB to the TP premium, or letting the buyer of a used car keep the seller's NCB. NCB is also listed with named-driver restrictions and voluntary deductibles among the discounts an underwriter applies to the motor book rate.
FAQs
What is no claim bonus in motor insurance?expand_more
A discount on the own damage premium at renewal for each claim-free year. On the tariff-era scale it rises from 20% after one year to 50% after five.
Can NCB be transferred to a new car?expand_more
Yes. NCB belongs to the insured, not the vehicle, so it can be applied to a replacement vehicle of the same class owned by the same person.
What happens to NCB after a claim?expand_more
A claim in the policy year means no NCB at the next renewal, and the accumulated discount is lost. It starts building again from the next claim-free year, unless an NCB protection add-on applies.
Does no claim bonus apply to third-party premium?expand_more
No. NCB is a discount on the own damage premium only. The third-party premium is prescribed by the Central Government under the Motor Vehicles Act.
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