What Is NCB in Motor Insurance

1. What Is NCB in Motor Insurance, Benefits & How It Works When it comes to motor insurance, No Claim Bonus (NCB) is one of the most powerful levers a policyholder has to reduce premiums while rewarding safe driving. Yet many car or bike owners are either unaware, misinformed, or underutilize this benefit. Drawing from over 15 years in insurance content writing and having authored thousands of articles in this domain, I’ll walk you through exactly what NCB means, how it functions, its benefits, conditions, and pitfalls, so you can make smarter choices and potentially save big. What Is NCB in Motor Insurance?

2. NCB (No Claim Bonus) is a discount on the Own Damage (OD) portion of your motor insurance premium that you earn when you don’t file any claims in a policy year. Think of it as a reward for safe driving and for avoiding losses that require your insurer’s intervention. •It applies only to the own damage part, not to the third-party liability premium. •The longer you go without a claim, the higher the NCB percentage you may qualify for. •In other words: safe driving = lower premium at renewal. NCB is recognized and regulated across many motor insurance policies in India (and many other countries), and is a priority consideration when choosing your insurer or renewing your policy. How NCB Works - The Mechanics Here’s a step-by-step breakdown of how NCB is earned, applied, reset, and preserved: 1.Starting Year / Baseline When you purchase a new insurance policy, you begin without any NCB (0 %). If you complete that policy term without making any claims, you qualify for an NCB at renewal. 2.Progressive Increase With each consecutive claim-free year, your NCB percentage typically increases. Many insurers follow a slab system like: Claim-Free Years Typical NCB Discount 1 year ~ 20 % 2 years ~ 25 % 3 years ~ 35 % 4 years ~ 45 % 5 years or more ~ 50 % (maximum) 3.Once you hit the maximum, subsequent claim-free years may not increase the discount further (unless your insurer offers a special incentive). 4.Application at Renewal At the time of renewing your policy, the insurer reduces the own damage premium by your earned NCB percentage.

3. For example, if your OD premium is ₹8,000 and your NCB is 35 %, the discount would be: Discount = ₹8,000 × 0.35 = ₹2,800 You pay: ₹8,000 –₹2,800 = ₹5,200 5.Claim Zero / Reset If you make a claim in a policy year, your NCB is typically reset to 0 % in the next policy. That means you lose the discount bonus you had built up. However, some insurers offer NCB protection add-ons (more on this later) which help you retain your NCB even after certain claims. 6.Transferability oThe NCB belongs to the policyholder, not to the vehicle. oIf you sell your vehicle, you can get a No Claims Certificate (NCC) or NCB letter from your insurer and carry that over to a new vehicle or a new insurer. oWhen switching insurers, you can present your NCB proof to avoid resetting to zero (provided the new insurer accepts your document). 7.Lapse & Expiry oIf your policy isn’t renewed within a grace period (commonly 90 days), you may lose your NCB. oSome insurers allow grace renewals (within 30 or 90 days) and protect NCB; others may reset it altogether if the policy lapsed beyond that. Benefits of NCB NCB is simple in concept but offers meaningful benefits to policyholders: •Significant Savings: The discount can reach up to 50 % on your own damage insurance, which is substantial. •Reward for Safe Driving: It encourages cautious behavior and prudent vehicle maintenance. •Ownership Flexibility: Since NCB is tied to you and not the car, you retain benefits across vehicles or insurers. •Compound Advantage: Over time, these savings aggregate, reducing your overall cost of ownership. •Add-On Synergies: With NCB protection add-ons, you can shield your earned NCB from being wiped out by one claim (subject to conditions).

4. NCB Protection Add-On - What It Is & When It Matters Because the downside of making any claim is losing your accumulated NCB, many insurers offer an optional NCB Protection / Safe-Claim Add-On. Here’s what to know: •Purpose: It allows you to submit a claim without losing your NCB (within agreed limits). •Eligibility: Usually available for vehicles up to a certain age (e.g., 10 years) and under specific conditions. •Limits: The cover may allow 1 or 2 claims per policy period without affecting NCB; additional claims may nullify it. •Cost vs Benefit: The add-on slightly increases your premium. For high-value vehicles or high NCB percentages, the protection often justifies the extra premium. •Switching Insurers: Some insurers won’t honor the protection if you shift companies, so read the fine print. The blog page from Square Insurance also highlights that NCB Protection helps you retain your earned discount, even when making claims, for eligible policies. Conditions & Caveats You Must Know To maximize NCB benefits and avoid surprises, keep in mind these critical points: 1.No Claims in the Year Even one valid claim (unless protected) can reset your NCB to zero. 2.Policy Renewal Timing Renew within the permissible grace period (often within 90 days). If you lapse beyond that, NCB may be forfeited. 3.NCB Applies Only to OD Cover The third-party coverage premium is unaffected by NCB. 4.Add-On Acceptance NCB protection may be accepted only when staying with the same insurer and under certain vehicle age limits. 5.Proof & Verification To transfer NCB, you often need an NCB certificate or letter from the earlier insurer. 6.Switching Insurers Not all insurers may accept external NCB claims; it depends on their policy. So ensure the new insurer validates your NCB proof.

5. 7.Policy Cancellation Voluntarily cancelling your policy prematurely may cost you the NCB benefit. Example - Illustrating NCB in Action Let’s see a practical example: •Your current policy’s own damage premium: ₹10,000 •You completed 3 claim-free years: NCB = 35 % •Without any claim: renewal cost = ₹10,000 –(10,000 × 0.35) = ₹6,500 •Suppose in year 4, you face a minor accident and make a claim. oWithout NCB protection: your NCB resets to 0 % next renewal. oWith NCB protection (allowed at 1 claim) → you retain 35 % for next renewal. Thus, with protection, your next own damage premium remains reduced; without it, you lose your accumulated discount. Best Practices & Tips to Maximize NCB •Avoid making small claims - sometimes it’s cheaper to self-fund minor repairs and preserve NCB. •Always renew on time within the grace period to avoid losing NCB due to policy lapse. •Check transfer options when changing vehicles or insurers; always get an NCB letter. •Evaluate NCB protection especially when your NCB is high - the cost of add-on may be lower than losing your discount. •Compare insurers - some accept third-party NCB proofs, others don’t; choose one that honors your earned NCB. •Read policy fine print - check age limits, claim limits, and transfer rules for NCB and its protection. Why NCB Matters in Insurance SEO & Content Strategy As someone who’s published thousands of insurance-related blogs, I know that “what is NCB in motor insurance” is a high-value keyword with high user intent. Users are often comparing policies, trying to save money, or searching for ways to better manage auto insurance costs. Matching user intent with clear explanations, real-world examples, and a strong trust signal (EEAT: expertise, experience, authority, trust) helps your content:

6. •Rank better on Google and other SERPs •Be shown in AI-based answer boxes or LLM responses •Engage insurance-seeking traffic effectively •Establish your site or brand as a credible resource So make sure your content doesn’t just explain, but also addresses user doubts, shows real examples, and includes trust signals (data, authority, FAQs, clear disclaimers). Conclusion No Claim Bonus (NCB) is one of the smartest incentives built into motor insurance. For safe drivers, it’s a tangible reward - potentially saving up to 50 % on own damage premiums. But it's not automatic or risk-free: you must maintain claim-free years, renew on time, and understand policy conditions. If your NCB is high or your vehicle is costly, NCB protection add-on becomes a compelling safeguard. And whether you switch vehicles or insurers, always retain your NCB certificate. Note: Before renewing or buying a new policy, check your earned NCB, submit your proof (if switching insurers), and request quotes that factor it in. The difference can be substantial. FAQs on NCB in Motor Insurance Q1. What is NCB in motor insurance? A: NCB (No Claim Bonus) is a discount offered on the own damage premium of your motor insurance when you don’t file any claims during the policy year. It can go up to 50% for five consecutive claim-free years. Q2. Does NCB apply to third-party motor insurance? A: No, NCB is applicable only on the own damage (OD) portion of your premium. It does not apply to the third-party liability cover mandated by law. Q3. How can I retain my NCB if I make a claim? A: You can retain your NCB by opting for an NCB Protection Add-on, which allows you to make a limited number of claims without losing your accumulated NCB benefit. Q4. Is NCB transferable when I buy a new vehicle or switch insurers? A: Yes. NCB belongs to the policyholder, not the vehicle. You can transfer it to a new car

7. or bike or even when changing your insurance company by submitting an NCB certificate. Q5. What happens to my NCB if I don’t renew my policy on time? A:If you don’t renew your policy within the90-day grace period, your accumulated NCB will lapse and you’ll lose the discount benefits on your next renewal.