This article explains No Claim Bonus (NCB) in motor insurance: what it means, how IRDAI’s standardised discount slabs work from 20% to 50%, and how to transfer, protect and maximise your NCB savings. Reading time: about 6 minutes.
Saved ₹11,500 on car insurance without doing anything special. That is what five claim-free years can deliver, thanks to No Claim Bonus (NCB). NCB is a discount applied to the own-damage portion of your motor insurance premium. It starts at 20% after your first claim-free year and increases to 50% at five consecutive claim-free years. The same slab structure applies across cars and bikes, and IRDAI requires every insurer in India to follow these slabs.
NCB can cut your own-damage (OD) premium by up to 50% after five consecutive claim-free years. Because the slab structure is standardised by IRDAI, all motor insurers in India must honour it.
Source: IRDAI Motor Insurance Guidelines
What is NCB in Motor Insurance?
No Claim Bonus (NCB) is a discount on the own-damage (OD) portion of your motor insurance premium. In simple terms: if you do not raise an OD claim during a full policy year, your insurer reduces your OD premium at renewal by a pre-defined percentage. The discount grows with each consecutive claim-free year until it reaches a maximum of 50% after five years.
Importantly, NCB belongs to the policyholder, not the vehicle. If you sell your car and buy another, your NCB moves with you. Also note that NCB does not affect the third-party (TP) premium; TP rates are fixed by IRDAI and remain unchanged regardless of your claim history. NCB applies only to the own-damage component.
NCB Slabs: The IRDAI-Standardised Discount Table
IRDAI mandates the following NCB structure for all motor insurers. No insurer can offer higher mandatory slabs or omit any of these levels.
| Consecutive Claim-Free Years | NCB Discount on OD Premium |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5 years or more | 50% |
Tip: The ceiling is 50% — NCB does not increase after year five, no matter how long you remain claim-free. For example, if your OD premium is ₹12,000, a 50% NCB saves ₹6,000 each renewal. Over several years, savings on a mid-size car can accumulate significantly.
NCB Applies to OD Premium Only: Why That Matters
A motor insurance premium has two distinct parts. The own-damage (OD) premium protects your vehicle against accidents, theft, fire and natural disasters; this is the only element eligible for NCB. The third-party (TP) premium covers liability to others and is fixed by IRDAI based on criteria like engine capacity. When an insurer quotes “50% NCB” they mean a 50% reduction on the OD component, not the total premium.
What Happens to NCB the Moment You Claim?
If you file and settle one own-damage claim, your accumulated NCB resets to zero at the next renewal. This applies even if you had built up a 50% discount over five years. That is why many policyholders choose to pay out of pocket for minor repairs rather than claim and lose their NCB.
Watch out: Before filing a small claim, compare the repair cost to the extra premium you would pay next year after losing your NCB. Often the long-term cost of losing the discount outweighs the short-term repair bill.
One solution is the NCB Protector add-on. Available with comprehensive policies, it allows one (sometimes two, depending on the insurer) OD claim in a policy year without resetting your NCB. Once your NCB reaches higher slabs such as 35% or more, purchasing an NCB Protector often becomes cost-effective. Check the terms carefully, as insurers may limit the number of claims the protector covers per year.
Transferring NCB: New Car, New Insurer, Same Discount
Because NCB is attached to the insured person, you can transfer it when switching insurers or buying a new vehicle. Two common scenarios require a transfer certificate:
- Switching insurers at renewal: Request an NCB Transfer Certificate from your current insurer before the policy expires and present it to the new insurer. The new insurer must honour the same slab.
- Selling a vehicle and buying a new one: Obtain the NCB Transfer Certificate and ensure the gap between the old policy’s expiry and the new policy’s start date does not exceed 90 days.
Watch out: A gap longer than 90 days between policies forfeits all accumulated NCB permanently. Renew or buy a new policy before the 90-day limit to retain your bonus.
NCB When You Sell Your Car
The buyer receives the vehicle and the current insurance policy but not your accumulated NCB. IRDAI specifies that NCB belongs to the insured person, not the vehicle. The new owner begins building their own NCB from scratch. The only exception is when the policyholder dies; in that case, the policy, vehicle and accumulated NCB can transfer to the legal heir.
How to Check Your Current NCB Slab
Your policy document typically states the NCB percentage. For an official record, request an NCB Certificate from your insurer; they will issue it after verifying your claim history. This certificate is required when switching insurers or when insuring a new vehicle.
NCB for Two-Wheeler Insurance
The NCB structure for two-wheelers is identical to that for cars: same percentages, rules and the 90-day lapse condition. Because two-wheeler OD premiums are generally lower, the rupee savings per slab are smaller, but the principle and mechanics are the same. NCB Protector add-ons are also available for bikes.
NCB Protector: Is the Add-On Worth It?
For higher NCB levels — 35%, 45% or 50% — the NCB Protector is usually a worthwhile addition. For example, with an OD premium of ₹10,000 and a 50% NCB you pay ₹5,000. A minor ₹6,000 repair claimed through insurance would reset NCB to zero and raise next year’s OD premium back to ₹10,000, effectively costing an extra ₹5,000. The NCB Protector typically costs a few hundred rupees and can prevent that setback. At lower NCB levels the benefit is smaller, but protection becomes attractive once you reach the upper slabs.
Real-World Example: Five Years of Savings
Priya bought a compact SUV with an initial OD premium of ₹10,000 under a comprehensive policy and stayed claim-free. Her renewals reflected the rising NCB: Year 2 — ₹7,500; Year 3 — ₹6,500; Year 4 — ₹5,500; Year 5 and beyond — ₹5,000. Across four renewal cycles she saved ₹11,500 on OD premiums compared with paying the initial rate each year. She addressed minor parking scuffs privately to preserve her bonus. The compound effect of staying claim-free becomes visible in consistent savings at every renewal.
Comparing comprehensive motor insurance policies from the start helps you secure the right cover and begin building NCB immediately.
FAQs On No Claim Bonus (NCB) in Motor Insurance
1. What is No Claim Bonus in motor insurance?
NCB is a discount on your own-damage (OD) premium earned for each claim-free policy year. It starts at 20% after the first claim-free year and reaches 50% after five consecutive claim-free years, following IRDAI’s uniform slab structure.
2. Is NCB applicable on third-party car insurance?
No. NCB applies only to the own-damage component of a comprehensive motor policy. Third-party premiums are set by IRDAI and do not change with your claim record.
3. Can I carry NCB when I switch insurance companies?
Yes. Obtain an NCB Transfer Certificate from your current insurer before the policy lapses and present it to the new insurer. The new insurer is required to honour the same slab.
4. I haven’t renewed my policy in 4 months — have I lost my NCB?
Yes. Any gap beyond 90 days from the expiry date forfeits all accumulated NCB. You will start at 0% on the next policy.
5. Should I file a small claim if I have 50% NCB?
Generally no. A single OD claim will reset your 50% discount to zero, increasing your OD premium at the next renewal by the amount of the discount you were enjoying. For minor repairs, paying out of pocket is often the better long-term choice.
6. Are NCB slabs the same at every insurance company?
Yes. IRDAI mandates a uniform structure — 20%, 25%, 35%, 45%, 50% — across all motor insurers. Insurers cannot alter these mandatory slabs, although NCB Protector pricing may vary.
7. I bought a second-hand car — does the previous owner’s NCB transfer to me?
No. The seller retains their NCB. The new owner must build their own NCB from scratch. The seller can transfer their accumulated NCB to a new policy they take on another vehicle.
8. Can a claim be reversed to protect NCB?
Once a claim is settled and paid, reversing it for NCB purposes is usually not possible. If the claim is still pending, contact your insurer immediately — some insurers allow claim withdrawal before final settlement.