The cost of living is increasing each year. With multiple bills and investment priorities competing for a share of your wallet, you would surely want the biggest bang for every buck you spend! If you have been confounded by your rising fuel bills and have been skimping on running the air conditioner while driving, what follows, might help you put the brakes on your car woes.

As a reward for not making a claim, insurers offer policyholders discounts on premium paid. This is called No Claim Bonus (NCB). Effectively, it can result in a 20-50% reduction in your insurance premium outgo, depending on your claim history. If you’re scouting for cost-effective motor insurance plans, this feature can help reduce your overall premium by quite a margin.

If you’re buying motor insurance for the first time, we’re sure you would have a few questions. Here’s the low-down on how NCB works in practice:

When is it applicable?

For NCB to apply, you need to have made zero claims in the previous policy year. When your motor insurance policy is due for renewal, you can become eligible for up to 20% NCB after the first year, which might increase up to 50% at the end of 5 successive claim-free years, cutting down your premium by half.

What if I change my car?

NCB is not affected in case you change your car. Since NCB accrues to the policyholder, you can easily upgrade your ride and enjoy credit. NCB is portable to another provider, according to Insurance Regulatory Development Authority (IRDA) guidelines.

For example, if you have earned NCB of 20% with your existing provider, your new premium can reduce to the extent of your accumulated NCB.

Is it available on both types of motor insurance plans?

NCB is available only on comprehensive insurance plans and not on third-party liability plans.

What if I have a minor claim?

NCB works on the principle of zero claims. If your car sustains a minor dent and you claim damages from your insurer, you lose the benefit in its entirety. If the damage is relatively light, you may opt to pay for it out-of-pocket instead. By forgoing short term gratification for long term rewards, you can benefit from a significant reduction in insurance premium.

How does the insurance provider benefit from NCB?

NCB is an incentive offered by insurance companies to promote safe driving. It also helps them motivate policyholders to avoid making claims for minor damages.

What if my insurance policy lapses?

If your policy lapses and is not revived within the 30-day grace period, insurance coverage and any accrued NCB is terminated.

Learn more about different Health Insurance Plans here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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