Selling your old car? Have you secured your No Claim Bonus before it expires?

Selling a car is typically about negotiating the best resale price, but insurance experts say many vehicle owners overlook a key financial benefit — the No Claim Bonus (NCB). This often-ignored component of motor insurance can significantly reduce the cost of insuring your next vehicle, provided it is transferred correctly.

NCB is essentially a reward given by insurers for not making any claims during a policy year. It translates into a direct discount on the own damage (OD) premium at the time of renewal. As per IRDAI guidelines, the benefit starts at 20% after the first claim-free year and can go up to 50% after five consecutive claim-free years. Crucially, this benefit is attached to the policyholder and not the vehicle itself.

“When a car is sold, most people assume everything transfers to the buyer, but that’s not entirely accurate,” says Mayur Kacholiya, Product Head – Motor, Go Digit General Insurance. While the third-party insurance component is legally transferred to the new owner along with the vehicle, the NCB remains with the seller.

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However, retaining this benefit requires timely action. Once the car is sold, the policyholder must request an NCB retention certificate from the insurer. This document captures the number of claim-free years accumulated and serves as proof when purchasing insurance for a new vehicle. Without this certificate, the benefit cannot be carried forward.

The Insurance Regulatory and Development Authority of India (IRDAI) allows this certificate to remain valid for up to three years from the expiry date of the previous policy. This gives policyholders a reasonable window to purchase a new vehicle and still retain their accumulated bonus.

The savings can be substantial. For instance, if the OD premium on a new car is ₹12,000 and the policyholder has accumulated a 50% NCB, the premium reduces by ₹6,000. Over time, this can translate into meaningful cost savings, especially for frequent vehicle upgraders.

That said, the benefit is not permanent and can be lost under certain conditions. NCB is reset if a claim is made during the policy period. It can also lapse if the insurance policy is not renewed within 90 days of expiry. Additionally, switching to a third-party-only policy or failing to obtain the retention certificate before selling the vehicle can result in forfeiture of the benefit. Cases of misrepresentation or fraud also lead to cancellation of NCB.

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Another important aspect is the buyer’s responsibility. While the seller retains the NCB, the buyer must ensure that the insurance policy is transferred to their name within 14 days of purchase by submitting RC transfer documents to the insurer. This ensures compliance with legal requirements and continuity of coverage.

As vehicle replacement cycles become shorter and consumers upgrade more frequently, awareness around NCB portability is becoming increasingly important. A simple step — requesting the retention certificate at the right time — can help preserve years of disciplined, claim-free driving benefits.

FAQ: No Claim Bonus (NCB) Explained

What is a No Claim Bonus (NCB)?

NCB is a reward offered by insurers for not making any claims during a policy year. It directly reduces the Own Damage (OD) premium at renewal. As per IRDAI norms, the benefit starts at 20% after one claim-free year and can go up to 50% after five consecutive claim-free years.

Does the NCB transfer with the car when you sell it?

No. The NCB belongs to the policyholder—not the vehicle. While the third-party insurance component transfers to the new owner along with the car, the NCB remains with the original owner.

What happens to insurance when a car is sold?

Under Indian motor insurance rules, the third-party cover automatically transfers to the buyer. However, the new owner must inform the insurer within 14 days and complete the RC transfer endorsement to update policy ownership.

How can you retain your NCB after selling your car?

You must request an NCB Retention Certificate from your insurer immediately after selling the vehicle. This document records your accumulated claim-free years and acts as proof when purchasing insurance for a new vehicle.

How long is the NCB certificate valid?

The NCB retention certificate remains valid for three years from the expiry of your previous policy, as per IRDAI guidelines.

How do you use NCB for your next car?

When buying a new car, you can submit the NCB certificate to your insurer—whether it’s the same company or a different one. The accumulated discount will be applied to your new policy’s OD premium.

When can you lose your NCB?

NCB benefits are forfeited under several conditions:

If you make a claim during the policy period
If the policy is not renewed within 90 days of expiry
In cases of misrepresentation or fraud
If you switch to a third-party-only policy
If you fail to obtain the NCB certificate before selling your car