No Claim Bonus (NCB) Explained: Slabs, Transfer and Protection

No Claim Bonus is the reward for not claiming. It is also the most valuable discount in motor insurance, and the easiest one to lose by accident.

NCB slabs

NCB applies only to the own-damage premium. Third-party premium, PA cover and most flat-priced add-ons are not discounted.

What it is worth

On a car whose own-damage premium before NCB is ₹10,000, the discount grows from ₹2,000 in year one to ₹5,000 a year once you reach 50%. Over the first five claim-free years that adds up to ₹17,500 before GST — and ₹5,000 every year after that.

How you lose NCB

• A claim: any own-damage claim paid in the policy year usually resets NCB to 0% at the next renewal.
• A lapse of more than 90 days: if you renew more than 90 days after expiry, NCB is lost even without a claim.
• An incorrect declaration: if you declared NCB you were not entitled to, the insurer can recover it or dispute a later claim.

Moving NCB to another insurer or vehicle

Switching insurer at renewal doesn’t affect NCB. The new insurer applies it based on your previous policy and declaration, and may verify it.

When you sell a vehicle, the NCB stays with you. Ask your insurer for an NCB certificate (or retention letter) and use it on the policy for your next vehicle of the same class. Insurers accept these for a limited period — commonly up to three years — so don’t wait too long. If the policy itself is transferred to the buyer, the insurer will usually recover the NCB discount from the buyer.

NCB protection add-on

NCB protection lets you make a limited number of claims (often one or two in the policy period) without losing your NCB. It costs extra and is most valuable when you have reached 35%–50% NCB on a vehicle with a large own-damage premium. Note that it usually keeps your current slab rather than moving you up.

NCB and small claims

A claim for a ₹10,000 repair can cost you more than ₹10,000 in lost NCB over the next few years. Before you claim for minor damage, run the numbers with the claim vs pay calculator or read our guide.

NCB rules at a glance

Example: selling a car with 45% NCB

Rahul sells his hatchback, which had 45% NCB, and buys a new sedan three months later. He gets an NCB certificate from his old insurer when the sale goes through. His new sedan’s first policy can carry the 45% NCB, which on an own-damage premium of ₹20,000 before NCB saves ₹9,000 in the first year alone. Had he transferred the old policy to the buyer and not asked for the certificate, he would have had to start again at 0%.

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