By Rahul Vats When you renew your bike or car insurance, you might notice a discount called NCB. Many people see it but don’t fully understand how valuable it is. In reality, NCB can save you a good amount of money over time if used wisely.
Let’s break it down in a simple way.
What Is NCB in Insurance?
NCB stands for No Claim Bonus.
It is a reward given by the insurance company for not making any claim during the policy period (usually one year).
In simple terms: If you don’t claim insurance, you get a discount next year.
How NCB Works
NCB increases every year if you continue without making a claim. The longer you go claim-free, the higher your discount becomes.
Here’s the standard NCB structure:
- 1st claim-free year: 20% discount
- 2nd year: 25% discount
- 3rd year: 35% discount
- 4th year: 45% discount
- 5th year: 50% discount (maximum)
This discount is applied on the own damage premium, not the entire premium.
Why NCB Is Important
NCB is one of the easiest ways to reduce your insurance cost without losing coverage.
1. Saves Money Every Year
If you drive carefully and avoid claims, your premium keeps reducing.
2. Rewards Safe Driving
It encourages responsible driving habits.
3. Long-Term Benefit
Over 4–5 years, the savings can become quite significant.
Example to Understand NCB
Let’s say your own damage premium is ₹5,000.
- After 1 year (20% NCB): You save ₹1,000
- After 3 years (35% NCB): You save ₹1,750
- After 5 years (50% NCB): You save ₹2,500
So, the longer you don’t claim, the more you save.
What Happens If You Make a Claim?
This is the most important part.
If you make even one claim, your NCB usually resets to 0%.
That means:
- You lose all accumulated discount
- Your next premium becomes higher
So sometimes, for small damages, people prefer to pay from their own pocket instead of claiming insurance.
NCB Protection Add-On
Insurance companies offer something called NCB Protection Cover.
With this add-on:
- Your NCB remains safe even after making a claim (usually 1–2 claims allowed)
Is It Worth It?
- Good for people with high NCB (40–50%)
- Costs a little extra but protects your long-term savings
Can You Transfer NCB?
Yes, and this is something many people don’t know.
NCB belongs to the policyholder, not the vehicle.
So you can:
- Transfer NCB to a new bike or car
- Use it even if you switch insurance companies
You just need an NCB certificate from your previous insurer.
NCB vs Claim – What Should You Do?
This is a common confusion.
Small Damage (₹1,000–₹3,000)
- Better to pay yourself
- Keep your NCB intact
Major Damage
- Claim insurance
- NCB loss is acceptable
So the decision depends on the repair cost.
NCB in Bike vs Car Insurance
The concept is exactly the same for both:
- Same percentage structure
- Same rules for claim reset
- Same transfer benefits
Only the premium amount differs.
Common Mistakes to Avoid
Ignoring NCB While Renewing
Some people don’t check if NCB is applied correctly.
Making Small Claims
This leads to losing bigger future savings.
Not Transferring NCB
Many forget to transfer it when buying a new vehicle.
Tips to Maximize Your NCB
- Drive carefully to avoid claims
- Avoid claiming for minor repairs
- Consider NCB protection if your bonus is high
- Always check your NCB during renewal
- Keep your insurance active (don’t let it expire)
What Happens If Policy Expires?
If your insurance lapses:
- You usually get a grace period of 90 days
- Within this period, your NCB remains valid
After that:
- Your NCB may be lost
So always renew on time.
Final Thoughts
NCB is one of those small things in insurance that can make a big difference over time. It quietly rewards you for being a careful driver and helps reduce your premium year after year.
Instead of focusing only on the cheapest policy, it’s smarter to think long-term. Protect your NCB, use it wisely, and it will keep saving you money every year.