How No Claim Bonus is Calculated in Motor Insurance?

What is a No Claim Bonus or NCB?

No Claim Bonus or NCB is a reward given by an insurance company to an insured for not raising any claim requests during a policy year. The NCB is a discount ranging between 20%-50% and is given to the insured while renewing a policy. The NCB discount is offered on the premium amount during renewal. This discount is transferable and can be transferred even if the policyholder buys a new vehicle.

How to calculate No Claim Bonus? 

The No Claim Bonus is applicable from the second year of the policy period. After the first year, when no claim has been raised, your insurance provider offers you with a discount of 20% on the premium amount. This begins on second year, and this can go up to 5 consecutive years. To understand the working of a no claim bonus calculator, refer to the following table:


Age of policy

No Claim Bonus Percentage

After year one of no claim


After two consecutive years of no claim


After three consecutive years of no claim


After four consecutive years of no claim


After five consecutive years of no claim


When does the no claim bonus feature gets cancelled?

The No Claim Bonus feature stops working under the following scenarios:


  • If a claim request is raised, then the NCB will be scrapped.
  • If a policy is not renewed within 90 days of expiration, then also the NCB discount becomes invalid.


What are the benefits of No Claim Bonus?

  1. No claim bonus allows you to transfer the discount from one vehicle to another under the same owner.

  2. During renewal, the no claim bonus can also be transferred from the main owner to another.

Terms and Conditions of No Claim Bonus:

  1. If you’re selling your vehicle and buying a new one, make sure you transfer No Claim Bonus to the new vehicle. At the time of the transfer process, the insurance company will issue a certificate and there are also chances that the premium could be reduced. However, this decision could be at the discretion of the insurance company.

  2. No Claim Bonus will not be offered on only third-party insurance cover. It is only offered on your own damage cover or comprehensive policy.

What is a No Claim Bonus add-on?

Certain insurance companies including IFFCO-Tokio have started offering No Claim Bonus add-on to protect the NCB discount. This add-on cover lets you keep your NCB discount intact even if you raise any claim request up to a certain pre-decided limit.

What are the steps to transfer NCB?

  1. If the NCB certificate is transferred from one vehicle to another, then the owner should keep a copy of the transfer of ownership and the old registration copy, The next step is to take the transfer certificate from the insurance company.

  2. The third step is to request the insurance company to issue the NCB on the new policy after transfer.

What happens if you change your insurance provider?

If you change your insurance provider, the new insurance provider lets you keep the No Claim Bonus.

The No Claim Bonus discount calculation is pre-defined and very easy to understand. In case you wish to avail No Claim Benefit, make sure you do not place a request for claim during a policy year. If you’ve claimed cover for minor damage of your car/bike, you will lose the advantage of gaining a bonus. Hence, it is advisable to choose NCB as an add-on as it will keep your bonus intact if a claim is made.
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