No Claim Bonus (NCB) is one of the most financially significant elements of car insurance — and one of the least understood. It can cut your renewal premium by half, or it can disappear with a single bad decision. Here's everything you need to know.
What Is NCB?
NCB is a discount on your Own Damage (OD) premium at renewal, rewarding you for not making any claims during the previous policy year. The longer your claim-free streak, the higher the discount.
It only applies to the Own Damage component of your premium — not the mandatory third-party premium. And it stays with you (the owner), not the car.
The NCB Slab Structure
The discount increases progressively with each claim-free year:
| Claim-Free Years | NCB Discount on OD Premium | Example (₹10,000 OD premium) |
|---|---|---|
| 1 year | 20% | Pay ₹8,000 |
| 2 years | 25% | Pay ₹7,500 |
| 3 years | 35% | Pay ₹6,500 |
| 4 years | 45% | Pay ₹5,500 |
| 5+ years | 50% | Pay ₹5,000 |
At maximum NCB (50%), you're paying half the OD premium you'd otherwise pay. On a mid-range car, this could mean saving ₹4,000–₹8,000 per year.
The Most Important Decision: Should You Claim?
This is where most people make a costly mistake. The moment you make any own-damage claim, your NCB resets to zero.
Before filing a claim for minor damage, do this calculation:
- How much is the repair cost?
- How much NCB will I lose? (Calculate the difference in next year's premium)
- How many more years will I lose before rebuilding to 50%?
Example: You have 4 years of NCB (45% discount). Your OD premium is ₹12,000/year, so you're saving ₹5,400/year. A scratch repair costs ₹8,000. If you claim, you lose your NCB and it takes 4 more years to rebuild. Total NCB value lost: roughly ₹18,000+ over 4 years. Paying ₹8,000 out of pocket is the smarter financial decision.
The general rule: if the repair cost is less than 1–1.5x your annual NCB saving, pay out of pocket and protect your bonus.
How to Protect Your NCB
NCB Protection Add-On
Most insurers offer an NCB Protection add-on for a small additional premium (typically ₹500–₹1,200/year). With this add-on, you can make one own-damage claim per year without losing your NCB.
If you've built up 4–5 years of NCB and are at 45–50% discount, this add-on is almost always worth buying. The cost of losing your NCB in a single incident is far higher than the add-on premium.
Zero Dep + NCB Protection
If you have both zero depreciation and NCB protection, you've built a very strong claims position: you claim the full part cost without depreciation deduction, and you keep your NCB.
Transferring NCB When You Buy a New Car
NCB belongs to you, not your car. When you sell your old car and buy a new one, you can transfer your accumulated NCB to the new vehicle's insurance.
To do this, you need an NCB Retention Certificate from your current insurer at the time of policy cancellation. This certificate is valid for 3 years — you have 3 years to apply it to a new vehicle's policy.
Common error: Many people don't request the NCB Retention Certificate when they sell a car. If you forget, you lose your accumulated bonus permanently.
Does NCB Expire?
Yes. If you don't renew your car insurance within 90 days of the expiry date, your NCB expires and resets to zero. This is one of the most common causes of lost NCB — people delay renewal without realising the 90-day clock is ticking.
At Kavach, we track renewal dates for all our customers and send reminders well before expiry — specifically to prevent this from happening. It's one of the simplest things we do, and one of the most valuable.
The Kavach Verdict
NCB is one of the most financially rewarding — and most easily lost — features of car insurance. The rules aren't complicated once you understand them: know your NCB value before deciding whether to file any claim, use NCB protection if you've built up three or more years, and never let your policy lapse beyond the 90-day window.
What we see consistently at Kavach is that customers are most likely to make the wrong decision in the real moment — when something has just gone wrong with their car and they're trying to figure out whether to claim. That's exactly when it helps to have someone who knows your policy, your NCB balance, and the maths — so the decision is clear, not stressful.
Not sure what's right for you?
Book a free 30-minute call with a Kavach advisor. No jargon, no pressure — just honest guidance.