NCB (No Claim Bonus) is a discount your insurer gives you on the own-damage portion of next year's premium, as a reward for not making a claim in the current year. It starts at 20% after the first claim-free year, climbs to 50% after five consecutive claim-free years, and resets to zero the moment you make any claim. NCB belongs to you, not the car — it transfers to a new car you buy, and you keep it even when switching insurers.
| Consecutive claim-free years | NCB discount on OD premium |
|---|---|
| After 1st claim-free year | 20% |
| After 2nd | 25% |
| After 3rd | 35% |
| After 4th | 45% |
| After 5th and beyond | 50% (maximum) |
| Any year you make a claim | 0% next year (full reset) |
NCB in one paragraph
NCB is a discount on own-damage (OD) premium only — not on third-party, not on add-ons. It rewards drivers who don't use their insurance. The idea: if you haven't claimed for several years, you're statistically a lower risk, and the insurer can pass some savings back.
At the top of the ladder (50% after 5+ claim-free years), NCB can cut your OD premium in half — a saving of ₹8,000-15,000/year on a mid-size car. It's one of the single biggest levers on your premium, so protecting it matters.
How NCB accumulates and resets
Every renewal, your insurer looks at whether you made a claim in the just-ended policy year. If no claim, your NCB tier bumps up one step (up to the 50% cap). If any claim of any size, NCB resets to 0% for the renewal year.
The reset is binary, not proportional. A ₹6,000 bumper claim wipes out your 50% NCB just as surely as a ₹2 lakh engine claim does. This is the critical fact that drives the "should I claim for small repairs?" decision — covered below.
What NCB is worth — worked example
A ₹10 lakh, 2-year-old hatchback with IDV ₹8 lakh and 3% OD rate:
- Base OD premium: 3% × ₹8,00,000 = ₹24,000
- With 0% NCB: ₹24,000
- With 25% NCB (2 yrs): ₹18,000 — saves ₹6,000
- With 50% NCB (5 yrs): ₹12,000 — saves ₹12,000
Over a 5-year ownership window, going from 0% to 50% NCB compounds to ~₹35,000-45,000 in premium savings. That's the value you're protecting.
The small-claims trap
The critical NCB decision: should you claim for a minor repair, or pay out of pocket to preserve your NCB?
Rough rule: if the repair cost is less than the next-year NCB loss, skip the claim.
Worked example — a ₹9,000 bumper scrape on a car with 35% NCB:
- If you claim: insurer pays ~₹8,500 (after deductible). NCB drops from 35% to 0% next year. On a ₹24,000 base OD premium, that's a ₹8,400 hit next year alone, plus you've lost the upward ladder — over 2-3 years the compounded cost is ₹18,000-24,000.
- If you skip: you pay ₹9,000 out of pocket. NCB advances to 45% next year. You save the ₹8,400 next-year hit + maintain ladder progression.
Claim makes financial sense only when repair cost clearly exceeds the 2-3-year compounded NCB loss. For a mid-size car that threshold is usually ₹20,000-35,000+.
NCB Protect — the add-on that breaks the all-or-nothing rule
Most insurers offer an NCB Protect (sometimes called "NCB Retain") add-on: for a small extra premium, typically ₹500-1,500/year, your NCB survives one claim per policy year. Without it, any claim = full reset; with it, you can make one claim without losing your NCB tier.
Worth buying once you're at 35%+ NCB, especially in cities with heavy traffic where minor bumps are statistically likely. Read the policy fine print — some versions protect only against the first claim of the year, some cap the claim amount, and all versions still reset if you make two or more claims.
NCB is yours — not the car's
A widely misunderstood rule: NCB attaches to you as a policyholder, not to the vehicle. This has two practical consequences:
- Car sale: when you sell your old car, the new owner does not inherit your NCB. They start at 0%. You take your NCB with you to the next car you buy — as long as you buy a new policy within 90 days.
- Insurer switch: you can change insurers freely without losing NCB. Ask your outgoing insurer for an NCB Retention Certificate (or request it while buying the new policy). It proves your accrued NCB to the incoming insurer.
If there's a gap of more than 90 days between policies — unusual, but possible after selling a car and before buying the next — NCB expires and you start fresh. Don't let the window lapse.
NCB on a new car purchase
When you buy a new car and want to carry over NCB from the old one, tell the dealer (or the online insurance portal) at the quote stage. Provide:
- Your previous policy number
- NCB Retention Certificate from the outgoing insurer, OR
- Details of the sold vehicle and its transfer date
The new insurer verifies with the previous one and applies your NCB tier to the new policy. A 45% NCB carrying over to a new car's OD premium of ₹40,000 saves you ₹18,000 — don't leave this off the application.
People also ask
Does NCB apply to third-party premium?
No. NCB is a discount only on the own-damage (OD) component of comprehensive or standalone OD policies. Third-party premium is fixed by IRDAI by engine CC and has no NCB component.
How long is NCB valid if I don't renew immediately?
NCB remains valid for up to 90 days from the policy expiry date. If you renew within 90 days, your NCB tier is preserved. Beyond 90 days, NCB lapses and you start at 0% on the next policy.
Can I transfer NCB between two cars I own simultaneously?
No — NCB is tied to a single active policy. If you own two cars, each has its own policy with its own independent NCB tier. You can't stack or pool them.
What if the insurer denies my NCB claim?
Request a written reason. Usually it's a missing NCB Retention Certificate or a lapsed policy beyond the 90-day window. File a grievance with the insurer's internal ombudsman first; escalate to IRDAI if unresolved. Keep all prior policy documents as proof.
Does zero-depreciation add-on affect NCB?
No — claiming under zero-depreciation still counts as a claim for NCB purposes. The zero-dep add-on only reduces the wear-and-tear deduction on part replacements; it doesn't shield your NCB.