NCB in Car Insurance

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What is NCB in Car Insurance?

In India, the number of four-wheelers is increasing at a rapid rate. But before you buy a car in India, you must know that motor vehicle insurance is compulsory in India and you have to avail it while buying a car. But the good news is, that most insurance providers provide policyholders with NCB benefits. Now, most people in India are unaware of what NCB even means in the first place! That's why, we're here to answer a commonly asked question,

NCB full form in Insurance

NCB actually stands for ‘No Claim Bonus’. It is actually a kind of reward that the car insurance providers provide to their customers when they do not file any claim in a policy year. In this reward, the insured person gets a discount on their premium when they renew their insurance in the next policy year.

NCB in Car Insurance - How it works?

While everything else around you rises in price, your car insurance gives you a special benefit by actually giving you the choice to reduce your car insurance premium. How does it work, you ask? Well, it works almost like a rewards system. You start by gaining a 20% NCB discount if you haven’t made any claims for your first policy year. Consequently, you keep gaining an additional 5% from your second consecutive year of making no claims. This can go about a reduction of 50% in your sixth consecutive year. Long story short, the better driver you are, the better you protect your car- the better it works out for you in the long run.

Is it a good idea to make small claims and lose No Claim Bonus?

Actually, yes! In case you’ve got into a minor accident or are planning to use your car insurance for a small tyre burst, you could instead skip the claim and pay for its repairs yourself (only if you think it’s feasible!) and you can go a year without any claims and therefore gain a No Claims Bonus during your car insurance renewal.

No Claim Bonus Calculator

After understanding what an NCB policy is in insurance terms, the next big question is – how much is the no claim bonus for car insurance?

Calculating your car's No Claim Bonus is not that difficult. In fact, many insurance companies give you access to a No Claim Bonus Calculator on their websites that will help you calculate your No Claim Bonus amount accordingly. The same usually starts from the second year of your respective policy.

According to the present norm, NCB in India starts with 20 percent and goes up to 50 percent in the sixth year. No Claim Bonus percentage for any four-wheeler is generally calculated in the following way.

NCB Calculation for Car Insurance

Claim free years	No Claim Bonus
After 1 year	20%
After 2 years	25%
After 3 years	35%
After 4 years	45%
After 5 years	50%

Benefits of NCB in Car Insurance

1. Gives you positive rewards: The NCB is nothing, but a means to reward you for being a good and responsible driver and car owner.

2. Connected to you and not your car: NCB is connected to you as an individual and not your car. This means, no matter which car you have- as long as you have been renewing your car policies before its expiry date, you can continue to benefit from a NO Claim Bonus for your car insurance.

3. Save on car insurance premium: The benefit everyone loves! Discounts! A No Claim Bonus will save you at least 20% of your annual car insurance premium.

4. Easily Transferable: In situations where you’re either changing your insurer or car, the process to transfer of your NCB is simple and hassle-free. The only thing you need to ensure is, to shift your policy before your current one already expires.

Important things to know about NCB in Insurance

When is NCB Terminated?

It is seen that NCB is very beneficial. As long as you do not claim, you will continue to get the benefit of NCB protection. But if you have to claim for any reason during a policy year then you will not get the benefit of NCB in the next policy year. It is important to know that if you do not renew your existing insurance policy within 90 days from the date of expiry then your NCB will be terminated, and you will not get the benefit of No Claims Bonus anymore. Hence you should always renew your policy timely.

How to get NCB Certificate?

The next question that arises about NCB is how to get NCB certificate? At the time of buying an insurance policy, the policyholder is provided with an NCB certificate and it now depends on the policyholder whether he makes any claims or not in the policy year. If he claims, then he will not be entitled to the NCB benefit for the next year but in case he doesn't claim for the entire year, he will be eligible for the NCB benefit.

What is Previous NCB in Insurance?

Wonder what happens if you haven’t made any claims yet and decide to sell your car in the middle of the year or, in another case buy another car?

If you buy an old car from a dealer or any third-party and if the car is eligible for NCB then you can apply for a no claim bonus transfer. In this case, all that you have to do is, write to your insurance provider informing them about the sale of your old car and request them to transfer your NCB to the new car.

In case you’re now buying a new car insurance policy with Digit, all you have to do is mention your current NCB and the name and policy number of your previous insurer (if you’re buying a new car policy with us for the first time) and we’ll take care of the rest.

How to transfer NCB to new Car Insurance?

This depends on whether you’re buying your new car insurance online or through an agent, or offline. In case you are buying your new car insurance policy offline or via an agent, you will need to transfer your No Claim Bonus by submitting your buyer-seller agreement- Forms 29 and 30 along with a letter requesting the transfer of your NCB from your existing insurance company.

The respective insurer will then issue an NCB certificate which you’ll need to submit to your new car insurance company. However, if you’re going to buy your new car insurance online, you don’t need to do any of this. All you need to do is declare the right NCB and old policy number and name of the insurer and your new insurance company will manage the rest of the process.

Documents required for NCB Transfer

As far as the document is concerned you have to give the following documents along with the application:

After the submission of the above documents, no claim bonus will be transferred to the new car. Based on the existing NCB certificate the customer can avail the benefit of the discount on the insurance premium for the new car.

FAQs about No Claim Bonus in Insurance

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.

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 Certificate.

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.

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.

What is the maximum no claim bonus applicable on car insurance?

The maximum NCB applicable on car insurance is up to 50%. In the first consecutive year of no claims, your NCB starts at 20% and eventually goes up to 50% in case you’ve had no claims in five consecutive years.

Do insurance companies check the no claim bonus & verify the claim history?

Yes, all insurance companies do check if the no claim bonus and other details declared while buying your car insurance company was right or not. In case of any false declarations made, your insurer may not issue or cancel (if already issued) your car insurance policy.

Do you lose no claim bonus if you stop driving?

No, you don’t lose your no claim bonus if you stop driving. You only lose your NCB if you make a claim in the policy year, or don’t renew your car insurance policy before its expiry date.

How does NCB impact the overall car insurance premium?

If you haven’t made any claims in your first policy year, you will be given a 20% discount on your car insurance premium while you renew your car insurance policy. Just make sure you renew before your policy expires! Consequently, as the years go by without any claims made, your discount will keep increasing from 20% to up to 50%!

How long is NCB valid for?

Your NCB is valid until you make your next claim.

Do you lose NCB if you cancel insurance?

Yes, you will lose out on your NCB if you cancel your insurance completely before it expires. However, if you’re only looking to change your insurer, it’s better to declare your NCB or get your NCB certificate issued from your existing insurer to your new insurer and continue to benefit from your existing NCB instead of cancelling it altogether. As mentioned earlier, your NCB is connected to you as an individual and not your car or your insurer.