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How to Calculate NCB for Car Insurance

By Vikas Chandra Das
21 July 2022, 11:46 AM

When it comes to car insurance, there are several benefits and user-friendly features that every car insurance service provider comes up with. Nonetheless, No Claim Bonus (NCB) is surely the most attractive benefit out of all, and the one that people talk about the most. This is because you can enjoy discounts on your premiums if you drive your car safely. 

Sounds too good to be true? Let’s find out more about NCB or no claim bonus and how to calculate it. 

What is a No Claim Bonus?

NCB, in simple words, is a reward that the insurance company gives its customers for their good and responsible driving. Basically, if you do not make any claim at all throughout the year, you will get a 20% discount on your premium for the next year.  This discount keeps on increasing to 50% with each passing claim-free year. 

How does NCB work?

This rewards system starts with a 20% discount for the year you renew after your first claim-free year. If you manage to go claim-free in that year as well, the discount increases to 25%. 

Post this, for the next two years, the discount increases by 10%, and then from the 5th year onwards, you get a discount of 50%. We have represented this in the following table to give you a better picture. 

Claim-free yearsNo Claim Bonus Discount %
After 1 year20%
After 2 year25%
After 3 year35%
After 4 year45%
After 5 year50%

How to Calculate NCB for Car Insurance?

To truly help you understand this concept, let us take an example. 

Let’s say, you have a car insurance policy for which the premium is INR 18,000. You have 5 years of NCB benefits with you – a 50% discount. As a result, you can enjoy a cut of INR 9,000 after 5 years of this car insurance policy renewal, making the total price of premium just INR 9,000, instead of INR 18,000. 

One thing to note here is that the NCB does not apply to the third-party cover. 

Now that you know what NCB is and how to calculate it, you can choose the best car insurance policy that suits your needs. For this, always compare different policies and purchase them online to get the best deal. 

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