What You Need to Know About NCB Calculation in Motor Insurance

25 Nov 2021

We all love getting discounts on products and services. A discount does feel good, almost like a well-deserved reward. Did you know that you can get a discount on your car insurance too? This discount is called the ‘no claim bonus’ or NCB. The NCB is given to you by the insurer as a percentage of reduction on your insurance premium if you do not make any claim during the insured year. It is important to understand the NCB calculation in motor insurance if you wish to save money on your premiums.

To get a better understanding of how NCB works, read on.

How is NCB applied to your insurance premium?

The no claim bonus is made available to you only after the successful completion of the insurance policy year. The discount that you get is pre-defined and gets applied to the premium that you will pay for insurance renewal after your running insurance term has expired. The insurance provider automatically adjusts your premium according to the NCB earned by you. The NCB calculation for car insurance keeps increasing - up to a maximum of 50% - after the completion of every consecutive year that passes without you making an insurance claim.

Understanding how NCB is calculated

The NCB percentage is fixed and does not waver between insurance providers present in the market today. To help you understand NCB calculation in car insurance renewal, here is an example. If you get through one year of coverage without raising any insurance claim, you get to enjoy a 20% discount on the premium you pay when you renew your insurance policy. So, if your initial premium amount is Rs.1000, after the completion of one year that passes without you raising your claim, your premium reduces by 20%. Thus, you would only need to pay Rs.800 for the renewal of your insurance policy (provided you are taking the exact same coverage and insurance rates have not changed).

What are the different slabs of NCB?

The table below shows the different slabs of NCB calculation for car insurance -

No. of consecutive years completed without raising a claim	Percentage of NCB accumulated
Completion of first year	20%
Completion of two years	25%
Completion of four years	45%
Completion of five years	50%

Upon completion of the fifth year, the NCB does not increase and stays at 50%. Many insurance providers also offer an NCB calculator to help you with your car insurance no claim bonus calculation.

Advantages of NCB in car insurance

The NCB has a lot of benefits to offer. Let’s look at some of them -

• Promotes safe driving:-If you do not meet with an accident, you do not need to raise an insurance claim. Consequently, the desire to earn the NCB and pay a lesser premium promotes safe driving.
• Helps save money:-The NCB keeps increasing every year you do not make a claim, and you can end up paying relatively less for your coverage over the years.
• The accumulated NCB is transferrable:-The NCB does not get affected even if you change your insurance provider during policy renewal.

Disclaimer: For more details on risk factors, terms & conditions please read sales brochure carefully before concluding a sale. *The discount amount will vary subject to vehicle specification and place of registration