How No Claim Bonus Helps You Save Big on Car Insurance?

Mint

28-07-2025

Owning a car comes with responsibilities like regular maintenance, fuel costs, and of course, car insurance. While insurance offers a safety net against damages, accidents, or theft, not everyone knows that it also rewards good driving behaviour. Enter the No Claim Bonus (NCB), a benefit that offers you discounts for not making any claims.
This reward system can significantly reduce your insurance premium over the years, making it a smart way to save money while staying protected on the road.
The No Claim Bonus in car insurance is a discount offered by insurers if you do not file any claims during your policy period, which is typically one year. Think of it as a thank-you reward for being a safe and responsible driver.
It applies only to the own-damage portion of your policy. While third-party insurance is mandatory in India as per government regulations, it does not attract NCB. So, if you've taken a comprehensive car insurance policy or an own-damage standalone policy, the NCB benefit becomes relevant to you.
The best part about NCB is that it increases every year you go without a claim. The longer you drive without making a claim, the bigger your discount: 20% after the first claim-free year
after the first claim-free year 25% after the second
after the second 35% after the third
after the third 45% after the fourth
after the fourth 50% after the fifth consecutive year
So, after five years of careful driving, you can save up to half your own-damage premium. This adds up to a significant amount, especially for high-value cars or policies with added coverage.
As discussed earlier, NCB is literally a reward for not making any claims. Now, let's understand with the help of an example.
For instance, your car insurance premium is ₹ 10,000, with ₹ 6,000 being the own-damage component. If you don't raise any claims in the first year, you get a 20% NCB, meaning ₹ 1,200 off your next premium.
With consistent claim-free years, you could be saving ₹ 3,000 or more annually by the fifth year. However, if you file a claim, even for a minor scratch or dent, your accumulated NCB may reset to zero unless you have opted for an NCB protection add-on.
Still, when major repairs are involved, claiming is often the smarter choice. For instance, in FY 2024-25, Digit Insurance settled a third-party private car claim worth ₹ 1.50 crore in Raipur, reflecting its strong claims support and reliability.
To fully benefit from No Claim Bonus in Car Insurance, you should understand a few key points: NCB is given to the policyholder, not the car. So if you sell your car and buy a new one, you can transfer your NCB.
NCB is transferable across insurers. Your earned NCB can move with you.
NCB resets if a claim is made, unless you have an NCB Protection add-on.
If your policy lapses and isn't renewed within 90 days, you lose your NCB benefit.
Some insurers offer an NCB Protection add-on. This feature allows you to retain your NCB even if you raise a claim, usually once during the policy term. It's useful when unavoidable accidents happen, and you want to protect your bonus.
Keep in mind that this add-on may come at a small extra cost, but it could be worth it if you've accumulated a high percentage of NCB.
If the repair cost for damage is lower than the potential NCB loss, it might be wiser to pay from your pocket and retain your NCB. For instance, a ₹ 3,000 scratch may not be worth losing a 35% discount on a ₹ 7,000 own-damage premium ( ₹ 2,450 in savings).
This is especially true for small repairs, parking dings, or cosmetic issues where insurance claims can be skipped.
The no claim bonus in car insurance is one of the most under utilised yet impactful benefits available to drivers. It rewards your clean record, saves you money, and even gives you negotiating power when switching insurers.
So, next time your car insurance renewal is around the corner, don't just look at the premium, check your NCB status and plan your renewal smartly. A little caution on the road today could lead to big savings tomorrow.
Note to readers: This article is part of Mint's paid consumer connect Initiative. Mint assumes no editorial involvement or responsibility for errors, omissions, or content accuracy.
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