How is No Claim Bonus calculated during car insurance renewal?

Understand how insurance providers calculate the No Claim Bonus during policy renewal.
How is No Claim Bonus calculated during car insurance renewal?
3 mins

A No Claim Bonus or NCB is a reward given to policyholders for having a claim-free year. The insurers offer NCB if they do not raise any insurance claims during a particular policy year or consecutive policy years. Policyholders with a claim-free record can get from 20% to 50% discount on premiums. However, individuals should keep in mind that this reward does not depend on the make and age of the insured vehicle.

When does the no claim bonus feature gets cancelled?

You get the benefit of NCB only on comprehensive motor insurance policies. You cannot avail of the NCB benefit if you have standalone own-damage insurance or third-party insurance.

You benefit from NCB by getting discounts on premiums. You will get a 20% discount on the renewal premium of your car insurance policy if you have a record of one-claim free year. This scenario only applies if the policyholder does not make any claims in the past years. The rate of discount will increase with each claim-free year by up to 50% after five claim-free years.

Read more: What is no claim bonus in car insurance

How is No Claim Bonus in car insurance calculated?

Know how NCB (No ClaimBonus) is calculated. But before that, here’s a quick look at how much percentage of bonus you can accumulate over the years.

Number of years

Addition of No Claim Bonus percentage

One claim-free year


Consecutive two claim-free years


Consecutive three claim-free years


Consecutive four claim-free years


Consecutive five claim-free years


Calculating a No Claim Bonus in car insurance policy is a very straightforward procedure. Most insurance providers have a No Claim Bonus calculator on their official websites so you can easily calculate the NCB online. NCB starts after the first renewal of the motor insurance policy. At present, a No Claim Bonus starts at 20% after the first renewal and goes up to 50% after five consecutive claim-free years.

The NCB gets terminated in the following situations:

  • The policyholder fails to renew an insurance plan within 90 days from the policy expiry date.
  • The policyholder files an insurance claim during the policy year.

Benefits of No Claim Bonus in car insurance

No claim bonus (NCB) protection is a benefit provided by car insurance companies to policyholders who have not made a claim during the policy period. NCBs have several benefits, including:

  • Reduced premium rates during policy renewal
  • Incentivises safe driving practices
  • Encourages policyholders to exercise caution while driving
  • Potential to transfer of accumulated bonus when switching to a new insurer
  • Increased sum insured over time, resulting in improved protection for the vehicle

NCBs promote safe driving habits and reduced accidents while encouraging policyholders to exercise prudence behind the wheel. It is a valuable aspect of car insurance that rewards good driving behaviour while providing increased protection for the vehicle owner.

Importance of a No Claim Bonus

No Claim Bonus is an important facility due to the following reasons:

  • NCB works as an incentive offered by the insurer to maintain your car and be a responsible driver.
  • No Claim Bonus works as great savings on premiums of car insurance policies. You get discounts on premium of up to 50% depending on the number of claim-free years.
  • You can transfer the NCB benefit from one insurer to another and continue to benefit from the bonus.
  • Also, if you sell the car, the NCB still stays. NCB is applicable to the policyholder and not tied to the vehicle.

Terms and conditions of a No Claim Bonus transfer

Here are the terms and conditions of transferring NCB to another insurer or policy:

  • NCB gets transferred from one vehicle to another only if the policyholder remains the same.
  • NCB gets transferred from one motor insurance provider to another only when renewing the car insurance policy.

You need to submit an NCB certificate from the previous/current insurer.

Documents required for a No Claim Bonus transfer

Here is a list of documents required for a No Claim Bonus transfer:

  • Photocopy of car insurance
  • Receipt of car delivery
  • Transfer application
  • NCB certificate
  • Buyer-seller agreement (Form 29 and 30)
  • Copy of ownership transfer certificate
  • Copy of booking receipt in case purchasing a new car

No claim bonus if the vehicle is in an accident or stolen

In case your vehicle is stolen or meets with an accident, the no-claim bonus is also affected.

  • NCB in case of an accident: The no claim bonus may be forfeited unless the insurer recovers most expenses from the at-fault party. If a third party is involved, and fault cannot be determined, costs are divided, impacting the no-claims bonus.
  • NCB in case the vehicle is stolen: The situation remains the same in case of car theft, as the insurer cannot recover costs from another company, putting the no-claim bonus in jeopardy.

Know how your car’s value depreciates over time: Car depreciation calculator.

Frequently asked questions

What is the percentage of No Claim Bonus that you can accumulate?

The No Claim Bonus keeps getting added after every claim-free year. You can accumulate up to 50% No Claim Bonus after having five consecutive claim-free years.

How to protect the accumulated NCB?

You can buy the add-on cover of NCB Protection Cover if you have a comprehensive car insurance policy. This add-on cover helps you retain the NCB even if you have made one claim. NCB Protection Cover enables you to make two claims without losing the accumulated NCB.

When does the No Claim Bonus get lapsed or cancelled?

Usually, the No Claim Bonus lapses immediately after you claim the benefit. Also, if you failed to renew your car insurance policy within 90 days of expiration.

Is NCB calculated on your entire insurance premium amount?

No Claim Bonus (NCB) is calculated after deducting the third-party liability premium. So, it is not calculated on the overall premium.

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