What Is a No-Claim Bonus? Rewarding Claim-Free Years

A no-claim bonus (NCB) is a benefit offered by insurers, most commonly in vehicle and health insurance, that rewards policyholders for not filing any claims during a policy year — typically in the form of a premium discount at renewal or, in health insurance, an increase in the sum insured at no extra cost.

How No-Claim Bonus Works in Vehicle Insurance

In vehicle insurance, a no-claim bonus accumulates as a percentage discount on the own-damage premium (not the mandatory third-party portion) for each consecutive claim-free year, commonly starting around 20% after the first claim-free year and increasing incrementally with each subsequent year, often up to a cap around 50%. Filing even a single claim during a policy year typically resets the accumulated no-claim bonus, which is why some policyholders choose to pay for very minor repairs out of pocket rather than file a small claim and lose an accumulated bonus.

How No-Claim Bonus Works in Health Insurance

In health insurance, a no-claim bonus often works differently — rather than a premium discount, many health insurers increase the sum insured by a set percentage, commonly 5-50% depending on the insurer and policy, for each claim-free year, effectively growing the coverage available over time at the same premium.

Protecting an Accumulated No-Claim Bonus

Many vehicle insurers offer an add-on called NCB protection, which allows a policyholder to file a limited number of claims within a policy year without losing their accumulated no-claim bonus, for an additional premium. Whether this add-on is worth the cost depends on the size of the accumulated bonus being protected and how likely a claim seems in the coming year.

FAQ

Can accumulated no-claim bonus be transferred between insurers? Yes, in vehicle insurance, accumulated NCB is typically transferable when switching insurers, provided proper documentation of the claim-free history is provided.

Does no-claim bonus expire? In vehicle insurance, NCB typically has a grace period (often 90 days) after policy expiry to be carried over to a new policy — letting it lapse beyond that window can mean losing the accumulated bonus.

A no-claim bonus rewards careful, claim-free policyholders with meaningful savings or expanded coverage over time, making it worth weighing carefully before filing a claim for a minor, low-cost incident. This is general information, not personalized financial or insurance advice.

Sources

• Insurance Regulatory and Development Authority of India — irdai.gov.in
• Ministry of Road Transport and Highways — morth.nic.in