How is no claim bonus calculated in car insurance


26 Jul 2023

Understanding the Calculation of No Claim Bonus for Car Insurance Savings

Car insurance is mandatory in India, and while it can be expensive depending on certain factors, there are ways to save money. One of these ways is the no claim bonus. This is a discount offered to those who have not had to make any claims in the previous year. The no claim bonus can be used to reduce the cost of your car insurance premium. But how exactly is this bonus calculated?

This article will go over the definition and calculation of no claim bonus.

What exactly is no claim bonus?

NCB truly stands for 'no claim bonus'. This is a type of incentive offered by vehicle insurance companies to clients who do not submit a claim during a policy year.

It functions almost like an incentive mechanism. If you do not make any claims during your initial car policy year, you will receive a 20 per cent NCB rebate. As a result, you continue to collect an extra 5 per cent from your second straight year of having no claims. This might result in a 50 per cent decrease in your sixth straight year. To summarise, the safer you drive, the more you protect your vehicle, and the better it pays out in your favour in the long term.

How to calculate no claim bonus?

The calculation of no claim incentive begins in the second year. The rate of discount begins at 20% and continues until the fifth consecutive car policy year. If you manage to submit no auto insurance claims during the fifth year as well, you will receive the same rate of discount as the fifth year on the next policy year, and it will continue at that rate from there on. Here is the discount rate chart for reference:

Number of consecutive no claim years

Discount received on

Discount rate of no claim bonus

1 year

2nd year

20% of the annual premium

2 years

3rd year

25% of the annual premium

3 years

4th year

35% of the annual premium

4 years

5th year

45% of the annual premium

5 years

6th year

50% of the annual premium

> 5years

6th year onwards

50% of the annual premium

Terms and conditions of no claim bonus?

Here are some terms and conditions related to car insurance no claim bonus:

1. A third-party car insurance policy will not be eligible for a no claim bonus. This is only available if you have your standalone own-damage insurance cover or comprehensive coverage.

2. Whenever a car insurance claim process is initiated, the no claim bonus will be cancelled.

3. If your policy is not renewed within 90 days of expiry, your car insurance no claim bonus rate will be reset.

4. If you decide to sell your car and get a new car, you can transfer your current NCB rate to the new car. The insurance provider will provide a certificate during the transfer procedure, and there's also a potential that your premium may be decreased. This choice, however, may be made at the judgment of your insurance provider.


If you're looking to save money on your car policy without making any claims, this post is for you. With a good understanding of no claim bonus, car owners can save a good amount of money on premiums. Keep reading to learn more about the no claim bonus, how it's calculated and how it can help save you money!

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.