No Claim Bonus (NCB) Explained, Simply

Team Digit, 31 Jul 2018


Everyone looks for the lowest possible premium for their car insurance policy. In a world of sky-rocketing prices, an NCB (No Claim Bonus) actually offers a way in which your car insurance policy premium can decrease each year. How? It’s simple: by rewarding you for being a great driver i.e. for you not having a single claim throughout the year!

NCB (No Claim Bonus) definition: NCB is a discount on premium given to the policyholder for having a claim free policy term. 

Here are some important things to remember about your No Claim Bonus:

1. How can I avail a No Claim Bonus for my car insurance?

A no claims bonus ranges from a discount of 20-50% and is something you earn at the end of your policy period by maintaining a record of making no car accident claims under your car insurance policy. This means that you can’t get a no claims bonus when you buy your first comprehensive car insurance policy – you can only get it on your policy renewal.

2. Does my No Claim Bonus get affected when I make a claim?

Yes. it drops to zero:( when you make a claim. But if you have a No Claim Bonus Protection addon, your NCB % will be protected.

3. Is No Claim Bonus applicable for the car owner, or the vehicle?
Your no claims bonus increases after every claim-free year on your policy renewal. For example, you can earn a 20% NCB after the first year of having no claim under your car insurance policy. This percentage will increase with every claim-free year, reaching 50% after 5 years – and resetting to zero when you make a claim. After reaching 50% in the 5th year, your NCB stops rising and remains the same. This is called the No Claim Bonus Sunset Clause.

A No Claim Bonus is meant for the car insurance policyholder regardless of the car. This means, even if you switch your car, your NCB stays with you. If you decide to buy a new car, you will be issued a new car insurance policy, but you can still avail of the NCB you accumulated on the old car or policy.

4. Can I have a No Claim Bonus for more than 1 car?

Your no claims bonus only applies to one car. So, if you treat yourself to a brand-new second car on your birthday, you’ll have to get it insured separately – and build up its own NCB by not making a claim for it.  

5. Can I transfer No Claim Bonus from one insurer to another?

If you’re changing insurance companies, you can transfer your no claims bonus from one insurance provider to another. And if you’re transferring to a new insurer at the time of your policy renewal, all you have to show is your last year’s policy document or renewal notice that mentions your NCB.

You can cut to the chase by buying car insurance online, where your NCB may be transferred based on just your declaration – and you don’t have to scramble for long-lost No Claim Bonus Certificates.

6. What happens to No Claim Bonus when I sell my car?

The NCB for you – the insurer – and not your car. If you sell your car, the insurance policy for the car can be transferred to the new owner of the car, but not your no claims bonus. But when you buy yourself a new car, your NCB will be waiting for you – intact, and ready to keep reducing your car insurance policy premiums!

7. How can I use my NCB when I buy a new car?

Your existing No Claim Bonus can be retained on only one of your cars. So, if you wish to transfer your NCB to a new car, then you need to sell the older car to a deal or a third-party. Also make sure to take the delivery note and the sale deed while closing the sale. After you do this, you can inform your insurance company that you’ve sold your car and want to transfer the NCB earned on the old car to a new car. You may need to share some documents for this, like

a) Delivery note received for the sale of the old car

b) Booking confirmation for the new car and

c) Copy of the car insurance policy for the old car.

Though if you’re a Digit customer, all the documents will be needed in soft copies.

7. Does it make sense to preserve my No Claim Bonus?

A no claims bonus is a great way to cut down on premium costs – so keep that in mind and avoid running to the garage for small damages to your car! Even a minor car insurance claim is enough to reset your NCB to zero – so why waste it on something small?  If the damage is higher than the amount that you will save on your car insurance premium through your NCB,  then claiming is the best way forward. If not, then it is wise to save preserve your NCB and earn discounts on your premium every year. 

8. Does a No Claim Bonus apply to third-party car insurance?

The NCB doesn’t cover the part of your premium that’s for third-party liabilities, which accounts for around 15-20% of your premium. Which means that you can’t avail of NCB if you have only third-party insurance – you will need to have Comprehensive or Own Damage car insurance to be eligible for NCB. A third party claim, however, doesn’t affect your NCB, which can be reassuring.

Maintain your No Claim Bonus by making claims wisely, and you can sit back and relax as your premium reduces with each passing year. The only other thing you need to remember is to drive safely. We all know that accidents are unpredictable.

9. Is No Claim Bonus an addon?

No, no claims bonus is not an addon. If you bought an Own Damage or Comprehensive car insurance policy, you are eligible for a no claims bonus. Yes, if you wish to protect the no claims bonus you have earned over years of not having any claim, you can purchase an addon of No Claim Bonus Protection. 

But if you do your best, and keep your eyes on the road, your No Claim Bonus will take care of the rest!



Explain it like I'm five

We're making insurance so simple, now even 5-year-olds can understand it.

What is a No Claim Bonus?

A boy sits down for dinner, and his mother serves him healthy vegetables. The boy finishes every last broccoli, spinach and carrot stick. Since he ate all his veggies, his mother decides to reward him for his good behaviour. After dinner, she surprises him by serving him a slice of delicious chocolate cake.

That chocolate cake, is No Claim Bonus!  

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