No Claim Bonus, usually shortened to NCB, is one of the most misunderstood lines on a car-insurance renewal. It is often described as a discount for safe driving, which is broadly true, but that shorthand leaves out the decisions that matter: which premium it reduces, whether it moves when you sell the car and what happens after a claim.
The first thing to know is simple: NCB belongs to the insured person, not to the vehicle. That makes it useful when you change insurers or replace your car, but it also means it cannot simply be handed to the buyer of your old vehicle.
What NCB actually reduces
IRDAI explains that NCB is accrued for a claim-free previous policy period. It applies to the own-damage portion of the premium, not the third-party liability premium. That distinction matters because the total renewal price contains several components; a large NCB percentage does not mean the complete policy bill will fall by that same percentage.
| Question | Practical answer |
|---|---|
| Is NCB attached to the car? | No. It is attached to the insured owner. |
| Does it reduce third-party premium? | No. It applies to the own-damage premium. |
| Can it move to a new insurer? | Yes, with appropriate proof of entitlement. |
| Does a normal own-damage claim affect it? | It is generally lost for the following policy period if a claim is lodged. |
When you may use or lose it
NCB progresses over successive claim-free years, subject to the prevailing rules and policy terms. A claim can remove the accumulated NCB at the next renewal, which is why a small repair sometimes leads to a sensible comparison: pay privately, or make a claim and lose the renewal benefit? There is no universal answer. Compare the repair estimate, deductible, policy terms and likely next premium instead of deciding from the repair bill alone.
A policy with NCB protection is a separate paid add-on in some products. It is not the default NCB itself. Read the wording for the permitted number and type of claims before treating such an add-on as a guarantee.
Selling your car? Take the right document
When the car changes hands, the insurance policy can be transferred to the buyer but the NCB does not go with it. IRDAI says the original owner can use the NCB on a new vehicle. Ask your insurer for the NCB retention or entitlement proof before the old policy is cancelled or transferred; retain the old schedule and renewal notice too.
A renewal-day checklist
- Check the NCB percentage shown on the renewal notice against your claim history.
- Separate own-damage premium from third-party premium before judging the discount.
- Ask for written confirmation if you are moving insurers.
- Do not declare an NCB you cannot support with documents.
- When selling, complete the insurance transfer promptly and keep proof of your NCB entitlement.
Reference: IRDAI motor-insurance guidance for policyholders.
