If you have recently renewed your car insurance policy, you may have noticed the initials NCB on your insurance policy. What does NCB in auto insurance stand for? NCB simply stands for No Claim Bonus, or sometimes referred to as a policyholder reward, meaning you are a safe driver for the previous year, and therefore there have been no claims made.
In this article we are going to discuss what NCB means in car insurance, the structure of NCB, how NCB will save you money, and how to retain NCB.
Understanding What Does NCB in Auto Insurance Stand For
The expression“what does NCB in auto insurance stand for” is a very simple but revealing construct — No Claim Bonus. It is a discount, offered by insurers, to vehicle owners/drivers who have not made any claims during the preceding policy term. In a very simple sense, it is a means of thanking you for being a responsible and conscientious vehicle owner.
Here is the matter:
- NCB in auto insurance stand for a bonus for not making a claim.
- NCB applies to the own damage (OD) portion of premium — it does not apply to the third-party portion.
- The driver becomes entitled to (again, not part of the premium) an NCB/discount of a starting point of 20% after driving for one year without making a claim to 50% which follows a driver who has had five successive years without an accident/claim.
“NCB in Auto Insurance” How the Discount Increases Over Years
| Claim-Free Years | Discount on Own Damage Premium |
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5+ years | 50% (Maximum) |
This means that if you go five years without making a claim, you can save half of your own damage premium – a huge advantage to cautious drivers.
When You Can Lose Your NCB
The NCB is a nice incentive, but it can easily be lost if you are not paying attention. Here are a few reasons why your NCB could lapse:
- If you make a claim at any time during the years your policy is in force.
- If you do not renew your policy within 90 days of the expiry date.
- If you do not transfer your NCB when you change your insurer or your car.
So, if you think about it, when making a minor claim, consider the damage and compare it to the NCB discount you will lose.
Transferring Your NCB
The positive aspect is NCB is connected to you, not your car. This also means you can move your NCB with you if:
- You sold your old car and bought a new one.
- You switched to a new insurance company.
Just ask your previous insurance company for an NCB certificate, and your new insurance company will apply the same discount at renewal.
What Is NCB Protection Cover?
Most insurers offer an NCB Protector Add-on. This Add-on allows you to retain your NCB in the event of one or two small claims in the year. It will cost you a little more but may be worth it if you are looking to keep the bonus that you have accumulated.
Why It’s Important to Know What NCB in Auto Insurance Stand For
Knowing what does NCB in auto insurance stand for can give you the information you need to make sounder financial decisions.
Here is the reasoning:
- Saves you money: You can receive a renewal premium discount of up to 50%.
- Encourages safe driving: If you do not make claims your rewards increase.
- Allows for planning: You will know whether to make a claim or pay out of pocket.
- Transferable benefits: You can carry your NCB to your.
Example Scenario
Suppose Ananya has an auto insurance policy and has not made a claim in five years.
- After the first year, you will receive a 20% discount.
- After the second year, you will receive a 25% discount.
- After the third year, you will receive a 65% discount.
Now that Ananya has bought a new vehicle, she can transfer the NCB that has accumulated—50% in this case—to the new policy which will mean a lot of savings on the premiums.
Conclusion
To sum it up, knowing what does NCB in auto insurance stand for can truly make a difference in how much you pay for your vehicle insurance over time. NCB (No Claim Bonus), which rewards safe driving and responsible ownership, has proven to be one of the most efficient ways to obtain a discount when it is offered on the renewal premium in auto insurance—including sometimes as much as a 50% discount.
Not making unnecessary claims, renewing your on-time and transferring the NCB from an old vehicle to the new vehicle, serves to maximize the benefit of using auto insurance during the experience. To summarize, what does NCB in auto insurance stand for in auto insurance, you are not only saving money but you are also creating a record that says you are a safe and reliable driver.
For more insights, visit IRDAI’s official site or trusted insurance providers like HDFC ERGO.
Frequently Asked Questions (FAQ’s)
1. In Auto insurance, what does NCB mean?
NCB means No Claim Bonus. It rewards you for not filling a claim while insured with a policy.
2. What is the rate of NCB I can get?
Depending on the number of claim years you have maintained without claims, you can receive a discount of 20%-50% from your own damage premium.
3. Is NCB applicable to third-party insurance?
No, NCB is only eligible with comprehensive or own damage policies.
4. Can I transfer my NCB to another car or company?
Yes, you can. You can ask your previous insurance carrier for an NCB certificate.
5. What is an NCB protector?
NCB protector is an optional add-on coverage, which lets you submit limited claims without losing your no-claims.”