Understand how claims influence your car’s insurance premium during renewal

When you register a claim on your car insurance policy, you lose a discount called the No Claim Bonus. It is a bonus that you get for being a safe driver and not making any claims during the policy term. You get the reward as a discount on the premium when you for 4-wheeler insurance renewal. Have a look at this article to know more about the No Claim Bonus (NCB) component and how it can influence the premium of your policy during renewal.

Understanding NCB

So, what is No Claim Bonus? NCB is a discount you earn for not filing claims on your car policy during the term. When you complete an entire policy term without zero claims, the insurance provider gives a discount on the premium in the subsequent year. The NCB adds up, and for every year you do not file a claim, it accrues in your account. The NCB can go up to 50 per cent. If you do not make any insurance claim for five consecutive years, you will only pay half of the insurance premium when you renew it in the sixth year.

Claims and NCB

As the name says, it is a bonus you earn for not registering a claim. You lose the benefit if you make even one small claim during the policy term. Also, if you have four years’ worth of NCB accrued, a claim in the final year can eat up the entire amount and reset the amount to zero.

Car insurance premium and Claims

Have a look at the NCB percentages that you get for claim-free years in an annual policy.


Years with no claim Percentage
1 20 per cent
2 25 per cent
3 35 per cent
4 40 per cent
5 or more 50 per cent

So, if your insurance premium is INR 3000 for one year, and you have 50 per cent accrued NCB, you must pay INR 1500 when you go for car insurance renewal online for the current year.

Objective of NCB

So, why do insurance companies offer NCB when you go for a renewal of your insurance plan? There are some logical reasons for this –

  • Encourages you to be a safe driver:

NCB might persuade you to drive safely and avoid getting into circumstances that can lead to car insurance claims. The No Claim Bonus component, therefore, motivates you to be a responsible driver and avoid driving rashly.

Dissuades small claims:

At times, the car repair costs are meagre that you can easily afford it. The insurance providers discourage you from filing small claims frequently by offering the NCB. It assists you to protect your insurance coverage and use it when the expenditure is more.

Urges car insurance renewal on time:

To keep your accumulated NCB active, you need to renew car insurance online India on time. If you let your policy expire and cross the 90-day grace period, you will lose your entire NCB. So, you should ensure to renew on time and stay covered as that is a vital thing to do.

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