No-claim bonus: the discount that belongs to you, not to your car

No-claim bonus is a reward for claim-free years, and it is one of the few insurance benefits in India that is genuinely standardised. Every general insurer applies the same slabs, because the structure is mandated rather than left to the market.

The slabs

After one claim-free year the discount is 20 per cent. It moves to 25 per cent after two, 35 per cent after three, 45 per cent after four, and reaches its ceiling of 50 per cent after five consecutive claim-free years. No insurer may offer more, and none may skip a step to appear more competitive.

The discount applies only to the own-damage portion of the premium. Third-party premium is set by regulation and is not discountable, so a 50 per cent NCB does not halve your total bill - it halves one component of it.

It follows the person, not the vehicle

This is the part most owners get wrong. NCB is attached to the insured individual. Sell the car and the buyer receives the vehicle, not your discount. Buy a replacement and your accumulated NCB transfers across to the new policy.

The buyer gets the keys. You keep the bonus.

To move it you need an NCB retention or reservation certificate from your outgoing insurer, which remains valid for a defined window - commonly three years - during which you can apply it to a newly purchased vehicle.

How it gets lost

Making a claim resets it. One own-damage claim in a policy year drops the accumulated bonus back to zero at the next renewal, which is why a small windscreen or bumper claim is often not worth making once your NCB has climbed into the higher slabs. Compare the claim amount against the extra premium you will pay over the next several years before deciding.

The less obvious way to lose it is by letting the policy lapse. If a comprehensive policy stays lapsed beyond 90 days, the accrued NCB is forfeited entirely - regardless of how many claim-free years produced it. Renewals that drift by a few weeks are recoverable; ones that drift by a few months usually are not.

Protecting it

NCB protection is an add-on that lets you make a defined number of claims in a year without the bonus resetting. It is worth pricing once you are at the 45 or 50 per cent slab, where the amount at stake is largest.

When switching insurers, ask the outgoing company for the NCB certificate before the policy expires rather than after. Retrospective corrections are possible but slow, and a wrongly removed NCB is far easier to prevent than to reverse.