A No-Claim Bonus (NCB) is a reward or discount given by an insurance company to a policyholder for not making any claims during the policy term. It is commonly offered in motor insurance, but some health insurance policies also provide similar benefits.
✅ Simple Definition
NCB is a premium discount or bonus for a claim-free insurance policy year.
✅ How NCB Works
- You buy an insurance policy (usually car or bike).
- If you do not make any claims during the policy period:
- The insurer gives a discount on the next renewal premium.
- The NCB increases with each consecutive claim-free year, up to a maximum limit.
- If you make a claim, the NCB may reduce or reset, depending on the policy.
✅ Typical NCB Rates (Motor Insurance)
| Claim-Free Years | NCB (%) on Next Premium |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5 years | 50% (maximum) |
These rates may vary by insurer and country.
✅ Key Points
- NCB is not a cash benefit; it reduces the premium at renewal.
- NCB is transferable if you switch insurers or sell your vehicle, provided proper procedures are followed.
- Making a small claim may reduce the NCB, but some insurers allow “protected NCB” for one claim.
- Only own damage claims affect NCB, not third-party claims.
✅ Example
- You have car insurance for ₹10,000.
- After 1 claim-free year, NCB = 20% → your next renewal premium = ₹8,000.
- If you make a claim during the year, the NCB may reset to 0%.
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