What is NCB in Motor Insurance & How It Helps You Save in 2025

When renewing your car insurance policy, one of the most rewarding terms you’ll come across is NCB in motor insurance – also known as No Claim Bonus. It’s not just a technical insurance jargon but a valuable discount that can help you save up to 50% on your car insurance premiums.

In 2025, as insurance costs continue to rise, understanding what NCB in motor insurance is, how it works, and how you can retain it can make a big difference in your yearly expenses. Let’s explore in detail.

What is NCB in Motor Insurance?

No Claim Bonus (NCB) is a reward given by your motor insurance company for not making any claims during your policy year. It acts as a discount on the own damage (OD) portion of your premium when you renew your policy.

This means that if you drive safely and avoid accidents, your insurance company acknowledges your responsible driving by offering you a discount of 20% to 50% on your next renewal premium.

For example, if you haven’t made any claims in the previous year, your next renewal premium could be 20% cheaper. Stay claim-free for 5 consecutive years, and you’ll enjoy a massive 50% discount on your own damage premium.

How Does NCB Work in 2025?

NCB is applicable only to the Own Damage portion of your motor insurance premium — the part that covers damages to your car due to accidents, theft, fire, or natural calamities.

The other part, Third-Party Liability, which is mandatory under Indian law, is fixed by the IRDAI (Insurance Regulatory and Development Authority of India) and doesn’t qualify for NCB discounts.

Here’s a quick example to understand how it works:

Let’s say your total annual premium is ₹15,000, which includes:

• ₹10,000 as Own Damage premium
• ₹5,000 as Third-Party premium

If you have an NCB of 50%, your discount will be on the Own Damage portion only — i.e., 50% of ₹10,000 = ₹5,000.
So, you’ll pay only ₹10,000 (₹15,000 – ₹5,000) at renewal. That’s a straight saving of ₹5,000 just for driving safely!

NCB Discount Structure for Car Insurance in 2025

The NCB increases progressively each year you don’t make a claim, as shown below:

Claim-Free Years	Discount on Own Damage Premium (NCB)
1 Year	20%
2 Consecutive Years	25%
3 Consecutive Years	35%
4 Consecutive Years	45%
5 or More Years	50% (Maximum NCB)

This structure is standard across all motor insurers in India as per IRDAI guidelines.

Eligibility Criteria for NCB

To be eligible for NCB benefits in 2025, you must:

• Have a comprehensive or standalone own damage car insurance policy.
• Not file any claims during the policy period.
• Renew your policy within 90 days of its expiry date.
• Ensure the same owner renews the policy, as NCB is non-transferable between owners.

Important Rules About No Claim Bonus

1. NCB Belongs to the Policyholder, Not the Vehicle

NCB is linked to the policyholder’s name, not the car. So, if you sell your car and buy a new one, you can transfer your NCB to your new vehicle under your name.

2. A Single Claim Can Reset Your NCB

Even one small claim during the policy period can reset your NCB to zero. This is why many car owners prefer paying minor repair bills from their own pocket rather than losing their accumulated bonus.

3. 90-Day Grace Period

You must renew your policy within 90 days of expiry to retain your NCB. If you miss this window, your accumulated NCB benefit will lapse.

4. Transfer of NCB Between Insurers

If you switch insurers, you can still retain your NCB by submitting an NCB Transfer Certificate from your previous insurer.

What is NCB Protection Cover?

One of the most valuable add-ons available in 2025 is the NCB Protection Cover. It ensures that even if you file a limited number of small claims, your NCB remains protected.

This means you won’t lose your bonus even after raising a minor claim during the policy term.

Benefits of NCB Protection Cover

• Retain your NCB even after making minor claims.
• Maintain your long-term savings on premium.
• Peace of mind for unexpected small damages.

Example:
Without NCB Protection – One claim resets your NCB to 0%.
With NCB Protection – Small claims won’t affect your accumulated NCB percentage.

This add-on is especially useful for people driving in urban areas where minor scratches or dents are common.

Why NCB is Important for Car Owners in 2025

1. Saves You Money

The biggest advantage of NCB is lower premiums. A 50% discount on your own damage premium can lead to thousands of rupees in annual savings.

2. Encourages Safe Driving

NCB rewards you for careful and responsible driving. The safer you drive, the higher your reward.

3. Helps Build a Clean Insurance Record

A claim-free history not only maintains your NCB but also improves your credibility with insurers, possibly giving you better deals and faster claim approvals in the future.

4. Boosts Vehicle Resale Value

When selling your car, a clean claim record and valid NCB certificate can make your vehicle more appealing to potential buyers.

How to Check Your NCB Status

You can easily check your NCB percentage online during renewal by logging into your insurer’s portal. It’s also mentioned in your policy renewal notice or insurance certificate.

If you’re changing your insurance company, request an NCB retention letter or certificate from your current insurer. This ensures a smooth transfer of your bonus to the new insurer.

Tips to Maximize Your NCB Savings

1. Avoid minor claims – pay for small repairs out-of-pocket.
2. Renew on time – renew your policy before 90 days from expiry.
3. Opt for NCB Protection Add-on – keep your NCB intact after small claims.
4. Drive safely – fewer accidents mean more savings.
5. Compare insurance plans – choose insurers with the best NCB benefits.

Example Scenario

Let’s say you’ve been driving safely for 5 years without any claims and have accumulated a 50% NCB.
If your current Own Damage premium is ₹12,000, then with 50% NCB, you’ll only pay ₹6,000.

That’s a saving of ₹6,000 every year, and over several years, it can add up to a substantial amount.

Conclusion

In 2025, No Claim Bonus (NCB) continues to be one of the most effective ways for car owners to reduce their motor insurance premiums. It’s more than just a discount — it’s a reward for being a responsible driver.

By understanding how NCB works, renewing your policy on time, and choosing an NCB Protection Cover, you can enjoy long-term savings and peace of mind.

So, the next time you’re renewing your car insurance, don’t forget to check your NCB — it’s your well-earned benefit for being a careful driver!

Frequently Asked Questions

1. What is NCB in motor insurance?

Answer: NCB, or No Claim Bonus in motor insurance, is a reward given to policyholders for not making any claims during the policy year. It provides a discount on the Own Damage portion of your car insurance premium, which can go up to 50% after five claim-free years.

2. How is NCB calculated in car insurance?

Answer: NCB is calculated based on the number of consecutive claim-free years. The discount starts at 20% after the first year and increases every year up to a maximum of 50% after five years, as per IRDAI guidelines.

3. Does NCB apply to third-party insurance?

Answer: No, NCB applies only to the Own Damage (OD) portion of a comprehensive or standalone OD car insurance policy. It does not apply to third-party insurance premiums, which are fixed by the IRDAI.

4. Can I transfer my NCB to a new car or insurer?

Answer: Yes, you can transfer your NCB when you sell your old car and buy a new one, or even when switching insurance providers. You’ll need to obtain an NCB Transfer Certificate from your previous insurer to carry forward your accumulated bonus.

5. What is an NCB Protection Cover?

Answer: An NCB Protection Cover is an add-on feature that allows you to retain your No Claim Bonus even after making a limited number of small claims during the policy year. It’s ideal for those who want to maintain their NCB benefits and still enjoy coverage for minor damages.