Most people think of motor insurance only when something goes wrong. A dent after a parking mishap. A cracked bumper. A flooded road during monsoon. And in those moments, filing an insurance claim feels natural, after all, that is what insurance is meant for.
But what many drivers do not realise is that one small claim can quietly undo years of savings.
Hidden inside every motor policy is s, a reward insurers give customers for not making claims. Over time, it can reduce premiums significantly. Yet despite being one of the most valuable benefits in motor insurance, it is also one of the least understood.
Many people lose it without realising how. Some reset it after making minor claims. Others lose it because of delayed renewals, transfer confusion, or paperwork they did not know mattered.
And by the time they notice, the discount is already gone.
This story is part of , confusion, and costly mistakes inside India’s motor insurance ecosystem, from claim rejections and mis-selling to the rules policyholders often discover only after losing money.
In simple terms, No Claim Bonus is a reward for not making claims during your policy year.
“For every consecutive claim-free year, the insurer applies a discount on the Own Damage (OD) premium at renewal,” said Saurabh Vijayvergia, Founder and CEO of CoverSure.
The discount begins at 20% after the first claim-free year and gradually rises to 50% after five consecutive claim-free years.
“These slabs are standardised across all general insurers under IRDAI regulations and are not negotiable,” he explained.
But the bigger point is where the discount applies.
“The OD component is typically the larger part of the motor premium. Third-party premiums are fixed by IRDAI and cannot be discounted. NCB operates exclusively on the OD premium,” Vijayvergia said.
That means someone at the 50% NCB slab is effectively paying half the price for the part of insurance that actually protects their own vehicle.
For many drivers, NCB feels like a small discount. In reality, it can save a meaningful amount over time.
“The savings are real and compound in a way most policyholders do not fully grasp until they see the long-term impact,” Vijayvergia said.
He gave the example of mid-segment cars such as the Maruti Suzuki Brezza or Hyundai Creta.
Over multiple claim-free years, the discount can steadily rise from 20% to 50% on the own-damage premium component.
“Depending on the insurer’s OD premium calculation and rating structure, this can translate into meaningful annual savings by the fifth year,” he explained.
For premium vehicles, the effect becomes even more noticeable.
“For a Toyota Fortuner, where the own-damage premium is significantly higher, the value of the NCB becomes even more noticeable,” he said.
Over years of disciplined driving and careful use of claims, NCB can help policyholders recover a significant share of the premiums they pay.
“It remains one of the most valuable loyalty benefits in retail motor insurance, though many consumers only realise its importance after accidentally losing it,” Vijayvergia added.
This is where No Claim Bonus becomes emotionally and financially tricky.
If someone scratches your car bumper and the repair bill is Rs 7,000 or Rs 8,000, should you claim insurance — or pay from your own pocket to protect NCB?
According to Vijayvergia, this is one of the most important financial decisions policyholders make, often without fully understanding the consequences.
“Every claim resets the NCB clock to zero,” he said.
And the loss is not limited to the next renewal.
“The loss is not just the immediate discount at the next renewal, but the cumulative value of rebuilding the bonus over multiple years.”
For people at higher NCB slabs, this can become expensive.
“This Rs 8,000 repair will cost you Rs 14,000 in NCB over the next three renewal cycles,” he explained, describing the kind of calculation most insurers never explain clearly while processing claims.
That is why many experts suggest using insurance primarily for larger losses.
“The broader principle holds regardless of slab: use insurance for large, infrequent losses. For minor damage, pay out of pocket, protect the NCB, and treat the insurer as the last resort, not the first call,” Vijayvergia said.
Another detail many drivers overlook is that claims create a visible history.
“Frequent claims create a visible claims history through industry databases like the Insurance Information Bureau (IIB),” Vijayvergia said.
Insurers can use this history while calculating future premiums and renewals.
“A high claim ratio can lead to premium loading or less favourable renewal terms over time,” he explained.
So repeated small claims may impact not just NCB, but the broader cost of insuring the vehicle in the future.
According to Vijayvergia, most NCB losses are not due to insurer errors.
“They are almost always traceable to specific policyholder decisions,” he said.
One of the biggest reasons is delayed renewal.
“If the motor policy is not renewed within 90 days of expiry, the NCB is forfeited entirely — not reduced, erased,” he explained.
That means someone who spent five years building up to a 50% NCB slab can lose everything because they missed the renewal window.
Another major reason is filing claims without understanding the consequences.
“Policyholders who file even a minor claim see their NCB reset to zero,” he said.
Then comes transfer confusion.
When people switch insurers or buy a new car, they often fail to complete the paperwork needed to transfer NCB.
“NCB portability requires an NCB certificate from the old insurer to be submitted to the new one before the policy is issued,” Vijayvergia said.
“When this step is missed, the new insurer applies 0% NCB.”
And then there is a lesser-known issue.
“A collision where the other party files a third-party liability claim also triggers NCB loss, even if the policyholder did not initiate a claim on their own vehicle,” he explained.
One of the biggest misconceptions around
“NCB belongs to the policyholder, the individual, and not the vehicle and not the policy document,” Vijayvergia clarified.
This means if someone sells their old car and buys a new one, the earned NCB can be transferred.
“The seller retains it and can apply it to a new vehicle’s OD premium or a policy with a new insurer,” he explained.
But because vehicle purchases and insurer changes often happen together, the paperwork gets missed.
“The NCB transfer paperwork is treated as a minor administrative step, is missed, and the policyholder absorbs a higher premium without fully understanding why,” he said.
According to him, one step solves most of these issues.
“Requesting the NCB certificate proactively, before the new policy is issued, is the single action that eliminates most of these problems.”
Insurance buyers are often sceptical of add-ons. But Vijayvergia says NCB protection is one of the few that genuinely offers measurable value.
“The NCB protection add-on allows a policyholder to make one claim in the policy year without losing their accumulated No Claim Bonus,” he explained.
In simple terms, your NCB remains protected even after one claim.
“The claim history is maintained, but the discount is surgically protected,” he said.
For people with high NCB levels, the numbers can make sense.
“A policyholder at 50% NCB on a vehicle with an OD premium of Rs 18,000 stands to lose Rs 9,000 per year in discount from a single claim,” Vijayvergia explained.
Meanwhile, the add-on itself usually costs around Rs 500 to Rs 1,500.
“At that price, the expected value calculation almost always favours purchasing it,” he said.
However, conditions matter.
“Most NCB protection add-ons cover only one claim per year. Some cap the claim value as a percentage of IDV. Some exclude theft claims,” he added.
This is perhaps the most common frustration among drivers.
If NCB increased, why did the premium also increase?
According to Vijayvergia, the answer lies in understanding how motor insurance pricing works.
“NCB reduces the OD premium. It does not affect any other component,” he explained.
At the same time:
“For older vehicles, where the OD premium is relatively small due to a depreciated IDV, the TP premium represents a larger share of the total bill, and NCB’s proportional impact shrinks accordingly,” he said.
That is why looking only at the final premium number can be misleading.
“The increase is coming from elsewhere, and the total premium figure alone obscures that entirely,” Vijayvergia explained.
According to Vijayvergia, renewal is the most critical moment in the NCB lifecycle.
“The renewal moment is the highest-risk point in the NCB lifecycle,” he said.
He recommends that policyholders:
He also warned against incorrect NCB declarations during online renewals.
“Many platforms auto-populate NCB based on vehicle age or previous entries, and if the declared NCB is inaccurate, insurers can reject or hold claims during verification,” he said.
In such cases, policyholders may later be asked to pay recovery amounts to the insurer.
No Claim Bonus sounds simple on paper — a reward for safe driving and avoiding claims.
But in reality, it quietly shapes how much people spend on motor insurance over years.
And for something so valuable, most drivers understand it only after losing it.
“The policyholder who engages only at the point of crisis will always be at a disadvantage,” Vijayvergia said.
“NCB rewards attention.”
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)