Premium Factors, Cover Types and 2026 Rules
No Claim Bonus (NCB) in car insurance: slabs, the 90-day rule and what wipes it out
The 20% to 50% NCB slabs on own-damage premium, how a claim resets them, the 90-day renewal window, NCB on switching insurer, and what does and does not count as a claim.
The No Claim Bonus (NCB) is a discount on the own-damage (OD) part of your motor premium for each claim-free policy year: 20% after one year, 25% after two, 35% after three, 45% after four and 50% after five or more consecutive claim-free years. A single paid OD claim normally brings it back to 0% at the next renewal. It belongs to you, not to the car or the insurer, so it moves with you when you switch insurer or buy another vehicle of the same class. It is lost if you renew more than 90 days after the previous policy expired.
This guide is part of how a car insurance premium is calculated.
The NCB slabs
| Claim-free years completed | NCB on OD premium |
|---|---|
| 1 | 20% |
| 2 | 25% |
| 3 | 35% |
| 4 | 45% |
| 5 or more | 50% |
The discount applies only to the OD premium. It does not reduce the third-party premium, the compulsory PA cover or GST directly (GST falls because it is charged on a smaller amount). Some insurers also apply NCB to certain add-on premiums; check the quote breakup.
Worked example: what NCB is worth in rupees
Illustrative. A car has a basic OD premium of ₹14,000 before NCB, and the owner has completed four claim-free years.
- NCB at 45%: ₹14,000 × 45% = ₹6,300 discount
- Net OD: ₹7,700
Without a claim this year, the owner would move up to 50% NCB at the next renewal. If the owner makes a claim this year, next year's OD premium (assume the same basic ₹14,000) is charged at 0% NCB: ₹14,000 instead of ₹7,000. The loss of NCB alone costs ₹7,000 plus 18% GST = ₹8,260 next year. And the following years the owner climbs back from 20% rather than staying at 50%:
| Year after the claim | NCB without claim | NCB after claim | Extra OD paid (on ₹14,000) |
|---|---|---|---|
| Year 1 | 50% | 0% | ₹7,000 |
| Year 2 | 50% | 20% | ₹4,200 |
| Year 3 | 50% | 25% | ₹3,500 |
| Year 4 | 50% | 35% | ₹2,100 |
| Year 5 | 50% | 45% | ₹700 |
| Total | ₹17,500 before GST |
Over five years the claim costs about ₹17,500 (₹20,650 with GST) in lost discount, assuming the basic OD stays the same. That is why small claims are often not worth making; the claim-or-pay calculation goes through it step by step.
The 90-day rule
If your policy expires and you renew within 90 days, you keep your NCB, although the vehicle is uninsured during the gap and the insurer may require an inspection. After 90 days the NCB is reset to 0%. This is why the 90 days is sometimes wrongly called a grace period: it protects the discount, not the cover. See renewing after the policy has expired.
What counts as a claim, and what does not
NCB is lost when the insurer pays an own-damage claim in the policy year. In standard practice:
- Accident repairs paid by the insurer: NCB lost
- Theft or total loss: NCB lost on that policy (and there is no vehicle left to carry it on, but it can be reserved; see below)
- A claim reported and then withdrawn before payment: NCB usually retained, but get the withdrawal acknowledged in writing
- A third-party claim against you: practice varies; many insurers treat a TP claim paid under your policy as a claim for NCB purposes, so ask
- Claims under the PA cover: usually do not affect NCB, but check your wording
With an NCB protection add-on, a limited number of OD claims a year (commonly one or two) do not reset the slab. The add-on protects the discount percentage, not the premium itself, which can still rise for other reasons.
Switching insurer
NCB is portable. The new insurer relies on your previous policy schedule and expiry date, and usually asks you to declare that no claim was made in the expiring year. Some ask for an NCB confirmation from the previous insurer. Declaring a claim-free year when you did claim is misrepresentation: when the insurers' records are matched, the NCB can be withdrawn, you may be asked to pay the difference, and a later claim can be refused. The industry shares claim data through the Insurance Information Bureau of India.
Selling the car or buying a new one
Because NCB belongs to the owner:
- When you sell a car, the insurance can be transferred to the buyer, but the NCB stays with you. The buyer pays back the NCB portion for the rest of the term; you can get an NCB reserving letter or certificate from your insurer.
- When you buy a new car, you can apply that NCB to the new car's OD premium, usually within a set period from the sale of the old one (commonly up to three years; check with the insurer).
- NCB moves between vehicles of the same class: car to car, two-wheeler to two-wheeler.
Details and the paperwork are in NCB transfer on a new car or sale.
Related guides
Frequently asked questions
Does NCB reduce my third-party premium?
No. NCB is a discount on the own-damage premium only.
I had 50% NCB and made one claim. Do I drop to 45%?
Normally you drop to 0%, not one slab down. Some insurers have products with a step-down feature or offer NCB protection as an add-on; check before assuming.
Can I keep NCB if the car is registered in my company's name?
NCB earned on a company-owned vehicle belongs to the company, not to the employee who drives it. It cannot be moved to a personally owned car.
Does NCB apply on standalone OD policies?
Yes. NCB applies to own-damage premium whether it is part of a comprehensive policy or a standalone OD policy.
Sources
- IRDAI — motor insurance consumer information and circulars
- Insurance Information Bureau of India — industry data repository used by insurers
- Bima Bharosa — complaints if NCB is refused wrongly
