BT Explainer: NCB belongs to you, not your vehicle: How the no-claim bonus can lower your premium
A No Claim Bonus can reduce your motor insurance premium by up to 50% after five consecutive claim-free years. The benefit belongs to the policyholder, allowing it to be transferred when you buy a new vehicle or switch insurers.
- Aug 26, 2026,
- Updated Aug 26, 2026 12:58 PM IST
A No Claim Bonus (NCB) can significantly reduce motor insurance costs for policyholders who maintain a claim-free record. However, one important feature of the benefit is often overlooked: the NCB belongs to the policyholder, not the vehicle. This means the accumulated discount can be carried forward when a person buys a new car or switches insurance providers.
How does the No Claim Bonus work?
According to Aditya Kumar, Head-Motor Underwriting, Digit Insurance, NCB is a long-term financial reward for safe driving. Policyholders earn a discount on the basic Own Damage premium for every year they remain claim-free.
The benefit follows a tiered structure. It starts with a 20% discount after the first claim-free year and increases to 25%, 35% and 45% in subsequent years. After five consecutive claim-free years, the NCB reaches a maximum of 50%.
NCB and the Policyholder
One of the biggest advantages of NCB is its portability. The discount remains associated with the policyholder rather than the vehicle on which it was earned.
So, if a person sells an existing car and purchases a new one, the accumulated NCB does not remain attached to the old vehicle. It can be transferred to the insurance policy for the new vehicle. The benefit can also be carried over when the policyholder changes insurers.
How to transfer NCB to a new vehicle
Policyholders switching vehicles need to inform their existing insurer and obtain an NCB Retention Certificate. The certificate, which is valid for three years, serves as proof of the claim-free record.
When purchasing insurance for the new vehicle, the policyholder can submit this certificate to the new insurer to have the eligible NCB discount applied to the new policy. This relatively simple administrative step can result in substantial savings on the premium for the new vehicle.
ALSO READ: Accidental death benefit rider: Is your family financially protected against unexpected accidents?
When can you lose your NCB?
Policyholders need to be particularly careful about insurance renewal deadlines. If the existing motor insurance policy is not renewed within the 90-day grace period after expiry, the accumulated NCB can be terminated.
A claim can also typically reset the NCB to zero. Therefore, vehicle owners should consider the financial implications before making a claim for minor repairs. In some cases, paying for a small repair from their own pocket could make more financial sense if it protects a substantial NCB.
NCB protector can safeguard the discount
Many insurers offer an NCB Protector add-on to protect the accumulated discount even after a claim. The exact terms vary by insurer. For instance, Digit Insurance allows policyholders with the NCB Protector add-on to move to the next slab or fall by only one slab after a claim, subject to the applicable policy terms.
Ultimately, maintaining a claim-free record, renewing insurance on time and understanding NCB portability can help vehicle owners preserve a benefit that can substantially lower their future motor insurance costs.
MUST READ: Third-party vs comprehensive car insurance: What every car owner should know
A No Claim Bonus (NCB) can significantly reduce motor insurance costs for policyholders who maintain a claim-free record. However, one important feature of the benefit is often overlooked: the NCB belongs to the policyholder, not the vehicle. This means the accumulated discount can be carried forward when a person buys a new car or switches insurance providers.
How does the No Claim Bonus work?
According to Aditya Kumar, Head-Motor Underwriting, Digit Insurance, NCB is a long-term financial reward for safe driving. Policyholders earn a discount on the basic Own Damage premium for every year they remain claim-free.
The benefit follows a tiered structure. It starts with a 20% discount after the first claim-free year and increases to 25%, 35% and 45% in subsequent years. After five consecutive claim-free years, the NCB reaches a maximum of 50%.
NCB and the Policyholder
One of the biggest advantages of NCB is its portability. The discount remains associated with the policyholder rather than the vehicle on which it was earned.
So, if a person sells an existing car and purchases a new one, the accumulated NCB does not remain attached to the old vehicle. It can be transferred to the insurance policy for the new vehicle. The benefit can also be carried over when the policyholder changes insurers.
How to transfer NCB to a new vehicle
Policyholders switching vehicles need to inform their existing insurer and obtain an NCB Retention Certificate. The certificate, which is valid for three years, serves as proof of the claim-free record.
When purchasing insurance for the new vehicle, the policyholder can submit this certificate to the new insurer to have the eligible NCB discount applied to the new policy. This relatively simple administrative step can result in substantial savings on the premium for the new vehicle.
ALSO READ: Accidental death benefit rider: Is your family financially protected against unexpected accidents?
When can you lose your NCB?
Policyholders need to be particularly careful about insurance renewal deadlines. If the existing motor insurance policy is not renewed within the 90-day grace period after expiry, the accumulated NCB can be terminated.
A claim can also typically reset the NCB to zero. Therefore, vehicle owners should consider the financial implications before making a claim for minor repairs. In some cases, paying for a small repair from their own pocket could make more financial sense if it protects a substantial NCB.
NCB protector can safeguard the discount
Many insurers offer an NCB Protector add-on to protect the accumulated discount even after a claim. The exact terms vary by insurer. For instance, Digit Insurance allows policyholders with the NCB Protector add-on to move to the next slab or fall by only one slab after a claim, subject to the applicable policy terms.
Ultimately, maintaining a claim-free record, renewing insurance on time and understanding NCB portability can help vehicle owners preserve a benefit that can substantially lower their future motor insurance costs.
MUST READ: Third-party vs comprehensive car insurance: What every car owner should know