What Is No Claim Bonus (NCB) in Car or Bike Insurance?

Have you renewed your car or bike insurance without making a claim in the previous policy year? You may be eligible for a benefit called No Claim Bonus (NCB). NCB can help reduce the cost of renewing your motor insurance. But many vehicle owners misunderstand how it works. Some think it reduces the entire insurance premium, while others believe the bonus belongs to the vehicle and automatically passes to its next owner. In India, NCB generally applies to the Own Damage (OD) premium, not the third-party liability premium. It is linked to the insured person, subject to the policy terms and applicable conditions. The Insurance Regulatory and Development Authority of India (IRDAI) explains these principles in its motor insurance guidance. Read IRDAI’s official guidance.

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What is an Insurance Premium?

An insurance premium is the amount you pay to an insurer to maintain your policy. Payments may be monthly, quarterly, annually or on another agreed schedule, depending on the policy.

Why it matters: Compare the premium alongside coverage, exclusions, limits and other policy conditions—not price alone.

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This guide explains NCB in simple English, including how it works, how a claim may affect it, and what to check when renewing or changing your car or bike insurance.

What Is No Claim Bonus in Motor Insurance?

No Claim Bonus is a renewal benefit that an eligible policyholder may earn for not making claims during the relevant motor insurance policy period. For example, suppose you have a car insurance policy with an Own Damage component. If you complete the policy period without a claim and meet the applicable conditions, you may qualify for an NCB discount when renewing that cover. The discount generally increases with successive eligible claim-free years, up to the applicable maximum. NCB is not a cash reward paid directly to you. It is usually applied as a discount to the eligible Own Damage premium at renewal. Important: NCB is different from the No Claim Bonus offered by some health insurance policies. In motor insurance, NCB generally reduces the eligible Own Damage premium. Health insurance may use a different structure, such as an increase in sum insured or a renewal premium discount, depending on the policy.

How Does NCB Work in Car and Bike Insurance?

NCB works in a similar way for eligible private car and two-wheeler insurance policies, although you should always check the terms of your specific policy. The basic process is:

You hold an eligible motor insurance policy.
You complete the relevant policy period and meet the conditions for NCB.
Your insurer determines the applicable NCB level.
The eligible discount is applied to the Own Damage premium at renewal.
If you change insurers, you can generally carry your earned NCB across, subject to proof and the applicable conditions.

NCB does not mean that your entire insurance renewal becomes cheaper by the same percentage. The discount applies to the eligible Own Damage premium, not normally to the third-party liability premium.

What Is the NCB Percentage in India?

IRDAI's motor insurance guidance describes the usual NCB scale as starting at 20% after one eligible claim-free year and increasing to a maximum of 50% after successive claim-free years. The applicable terms and eligibility conditions must still be checked for your policy.

Eligible claim-free period	Common NCB level
1 year	20%
2 consecutive years	25%
3 consecutive years	35%
4 consecutive years	45%
5 consecutive years	50%

These are commonly stated NCB levels, not a promise that every policy will qualify in every circumstance. Check the insurer's current policy wording and renewal documents to confirm the NCB applicable to your vehicle.

How Much Money Can NCB Save You?

The actual saving depends on the eligible Own Damage premium, the NCB percentage and the policy's other charges. Let's take a simple example. Suppose your renewal quotation shows:

Eligible Own Damage premium: ₹10,000
NCB: 20%

The NCB discount would be ₹2,000. The Own Damage premium after this discount would be ₹8,000, before considering other applicable items.

Calculation	Amount
Own Damage premium before NCB	₹10,000
NCB discount at 20%	₹2,000
Own Damage premium after NCB	₹8,000

This is an illustrative calculation, not a real insurance quotation. If your quotation also includes third-party liability premium, add-on covers, taxes or other charges, those items may still be payable. Do not assume that a 20% NCB reduces the final amount due by 20%.

Does NCB Apply to Third-Party Insurance?

Generally, no. Motor insurance NCB applies to the eligible Own Damage premium, not the third-party liability premium. The difference matters because motor insurance may include separate components:

Third-party liability cover: Covers eligible legal liabilities arising from injury, death or property damage caused to third parties, subject to policy terms and applicable law.
Own Damage cover: Covers eligible damage to your insured vehicle under the policy, subject to its coverage, exclusions and conditions.

A standalone third-party policy does not normally have an Own Damage premium on which the usual motor NCB discount can be applied. For a package policy containing both components, the NCB generally applies to the eligible Own Damage portion. Read the premium breakdown on your renewal quote if you want to understand exactly where the discount has been applied.

What Happens to NCB If You Make an Insurance Claim?

A claim may affect the NCB you have earned. Under the usual motor insurance rules described by IRDAI, making a claim can cause the NCB to be lost for the subsequent policy period. For example, imagine you have earned a 35% NCB and then make an Own Damage claim. Your NCB at the next renewal may reduce to zero under the standard applicable terms. However, the exact outcome depends on the policy conditions and whether you have an eligible NCB Protection add-on. Do not assume that every claim has the same effect or that an add-on automatically protects NCB for unlimited claims.

Should you make a small claim or pay for the repair yourself?

There is no universal answer. Before deciding, compare:

The repair cost you would have to pay yourself
The applicable policy deductible
The effect the claim could have on your NCB
Any other policy conditions that may apply
Whether an NCB Protection add-on applies to your situation

For example, if a minor repair costs relatively little, you may want to compare that cost with the NCB discount you could lose. But do not avoid reporting an accident when notification is required by the policy, law or circumstances. Follow the insurer's claim instructions and check the policy terms before deciding how to proceed.

What Is NCB Protection Cover?

NCB Protection is an optional add-on offered under some motor insurance products. It may help preserve the policyholder's eligible NCB after certain claims, subject to the add-on's conditions. It is not automatically included with every car or bike insurance policy. The permitted number of claims, eligible claim types and other requirements can vary. Before buying NCB Protection, check:

Whether the add-on is available for your vehicle and policy
The additional premium
How many claims may be allowed without losing NCB
Whether the benefit applies only when renewing with the same insurer
Any exclusions or other conditions
Whether the protection applies to the NCB level you have earned

NCB Protection does not mean that all repair costs will be paid. The underlying insurance policy's coverage, deductible and exclusions continue to matter.

Does NCB Belong to the Vehicle or the Owner?

Motor insurance NCB is generally associated with the insured person, not the vehicle itself. This is important when you sell your car or bike.

If you sell your vehicle

The motor insurance policy may be transferred to the new owner in accordance with the applicable process, but your earned NCB does not automatically transfer to the buyer. The buyer cannot simply take over your NCB because they have purchased the vehicle.

If you buy another vehicle

You may be able to use your eligible NCB on a replacement or newly purchased vehicle, subject to the applicable conditions and evidence requirements. Contact your insurer to confirm the process before assuming the discount will apply.

If you change your insurance company

You can generally carry your earned NCB to a new insurer at renewal, provided you establish your entitlement and meet the relevant conditions. IRDAI's motor insurance guidance identifies a renewal notice or confirmation from the previous insurer as possible proof. Never claim a higher NCB than you have earned. Give accurate information and provide the documents requested by the insurer.

What If Your Car or Bike Insurance Expires?

Do not leave your motor insurance renewal until the last minute. IRDAI's published motor insurance guidance warns that an insurance break can affect NCB. It states that when a comprehensive policy remains expired for more than 90 days, the accrued NCB is lost. Current eligibility and renewal requirements should be confirmed with your insurer. If your policy has expired:

Check the expiry date and your existing policy documents.
Contact the insurer or review its official renewal instructions.
Confirm whether your NCB remains valid.
Ask whether vehicle inspection or other steps are required.
Do not enter an NCB percentage unless you can substantiate it.

A lapsed policy can also create a gap in insurance protection. Avoid assuming that you have coverage while waiting for a renewal or inspection to be completed.

How to Check Your NCB Before Renewal

Use this checklist before paying for your next car or bike insurance policy:

Check the NCB percentage shown on your previous policy or renewal notice.
Confirm whether any claim was made or remains pending under the previous policy.
Verify that the proposed NCB matches your eligible claim-free history.
Check the Own Damage premium separately from third-party liability premium.
Compare the final premium, deductibles, Insured Declared Value (IDV) and coverage.
If changing insurers, ask what evidence is required to transfer NCB.
If selling or replacing your vehicle, confirm the procedure for using your NCB.
Review any NCB Protection add-on and its specific limits.

NCB is one part of a motor insurance quotation. A lower premium is not necessarily a better deal if the policy has a lower IDV, higher deductibles or different coverage.

Frequently Asked Questions About NCB

1. What does NCB mean in car insurance?

NCB stands for No Claim Bonus. It is a renewal benefit that eligible policyholders may receive for not making claims during the relevant policy period. It generally applies to the Own Damage premium.

2. Is NCB available for bike insurance?

Eligible two-wheeler policies with an Own Damage component may qualify for NCB, subject to the policy terms and applicable conditions. Check your insurer's renewal documents.

3. What is the maximum NCB in motor insurance?

IRDAI's motor insurance guidance describes a commonly used scale that reaches 50% after five successive eligible claim-free years. Confirm the applicable percentage and conditions with your insurer.

4. Does NCB reduce the full insurance premium?

Usually, no. Motor insurance NCB generally applies to the Own Damage premium, not the third-party liability premium. Other charges may also remain payable.

5. Will I lose NCB after making a claim?

A claim can affect or remove NCB at the next renewal under standard policy terms. An NCB Protection add-on may change the outcome for eligible claims, but its conditions and limits must be checked.

6. Can I transfer NCB to another insurance company?

Generally, yes. You may carry earned NCB to another insurer at renewal, subject to proof of entitlement and the applicable requirements.

7. Can I transfer NCB to the buyer when I sell my car?

Your NCB does not normally transfer to the buyer along with the vehicle. The buyer's policy and your NCB entitlement must be handled according to the applicable process.

8. Can I use NCB on a new car or bike?

You may be able to use eligible NCB on another vehicle you purchase, subject to the applicable conditions. Contact your insurer and obtain confirmation before relying on the discount.

9. Does third-party-only insurance qualify for NCB?

The usual motor NCB discount applies to the eligible Own Damage premium. A standalone third-party-only policy normally has no Own Damage premium to which that discount can be applied.

Final Thoughts

No Claim Bonus can help eligible car and bike owners reduce their Own Damage renewal premium after claim-free years. But it is important to understand what the discount applies to and what may affect it. Check your NCB percentage, compare the full renewal quotation, disclose your claim history accurately and confirm the policy conditions before renewing or switching insurers. Disclaimer: This article provides general educational information, not personalised insurance advice. NCB eligibility, transfer, renewal and protection-add-on conditions depend on the applicable policy wording and insurer requirements. Confirm the current terms with your insurer before making a decision.