No Claim Bonus Explained: The ₹2,525 Gap Between a 20% and a 50% Car Insurance Discount

No Claim Bonus can cut your car’s own-damage insurance premium in half, from 20% off after one claim-free year to 50% off after five, but the discount is fixed by IRDAI regardless of insurer, touches only one part of your bill, and resets to zero if a policy lapses for more than 90 days. On a Maruti Swift LXI, that gap is worth ₹2,525 a year. With GST 2.0 showroom cuts pushing more owners to trade in this festive season, getting the transfer paperwork right matters more than usual.

What No Claim Bonus Actually Discounts

NCB rewards a claim-free year, and it only ever touches the Own Damage (OD) part of your premium, the portion covering your own car’s repairs. The Third-Party premium, which covers damage you cause to someone else, is fixed by IRDAI every year, and NCB never reduces it. A “50% NCB” headline never halves your total renewal bill; insurers advertising it that way are technically correct and practically misleading.

The bonus belongs to the person, not the car. Sell your Swift and buy a Creta, and your accumulated NCB moves with you to the new policy. The buyer of your old Swift starts at 0%, even though the car itself never filed a claim.

The Five NCB Slabs, and What They’re Worth

IRDAI mandates the same five slabs across every general insurer in India, from Bajaj Allianz to Go Digit. No insurer can offer a better rate at any claim-free year.

Here is what that looks like in rupees. Bajaj Finserv’s own insurance calculator lists a Maruti Swift LXI at an IDV of ₹3,28,616 with a base OD premium of ₹8,416 before any NCB is applied.

The IRDAI-fixed TP premium gets added on top regardless of which row you’re on. That’s the real gap between a fresh policyholder and someone five years claim-free on the same Swift: ₹2,525 a year, every year, for as long as you stay claim-free.

How to Transfer NCB When You Sell Your Car

This is the step most owners get wrong, because nothing happens automatically. Before you hand over the keys:

1. Ask your current insurer in writing for an NCB retention certificate, before the policy lapses, not after.
2. Keep the sale paperwork ready: Form 29 and 30, the sale receipt, and the buyer’s acknowledgment.
3. When you insure your next car, hand the new insurer the retention certificate. They apply your earned slab to the new OD premium from day one; you don’t restart at 20%.

The certificate is typically valid for three years, so you don’t have to buy the next car the same week. What you can’t do is let it sit indefinitely and expect any insurer to take your claim history on your word alone.

The 90-Day Deadline That Resets Everything to Zero

If a policy lapses and isn’t renewed within 90 days of expiry, the NCB is gone, not reduced, gone. Five years of claim-free driving and a 50% slab reset to 0% the day you cross day 91. Insurers make no exception for a missed reminder email or a car that sat unused in a garage; the clock runs from the policy’s expiry date, not from when you last drove the car. This catches people mid-sale or mid-move more often than it should, so mark the date somewhere you’ll actually see it.

Is NCB Protection Worth Buying?

NCB Protection is an add-on, usually costing an extra 5-10% of your OD premium, that lets your slab survive one claim instead of resetting to 0%. It only makes sense above the 35% slab, where the gap between what you’re protecting and what the add-on costs is large enough to matter. Buying it in year one, when you’re still at 20%, is paying to protect a discount not yet worth protecting.

Skip NCB Protection until you’re past year three. Below that, the add-on usually costs more over its life than the NCB it’s guarding.

It’s worth checking before a festive-season upgrade too. If GST 2.0 pricing has you eyeing a new car from this site’s list of cars under ₹10 lakh, your retention certificate is what stands between a 50% slab and starting over at zero.

The Scratch That Isn’t Worth a Claim

The other side of NCB math is deciding when to actually file a claim. A minor bumper scrape costing ₹6,000-8,000 to repair often costs less than the NCB you’d lose by claiming on it, especially past the 35% slab. A small claim that drops you from 50% to 0% can cost more across the next several renewals than paying the repair bill yourself. This site’s own calculators can help you compare the claim-versus-pay-yourself math before you decide.

Does NCB transfer automatically when I sell my car?

No. You must request a written NCB retention certificate from your current insurer before the policy lapses, then submit it to your new insurer when you buy the next policy. The transfer never happens on its own.

Can I use my car’s NCB on a new bike instead?

No. NCB earned on a four-wheeler policy cannot move to a two-wheeler policy, or vice versa, because IRDAI treats them as separate insurance classes with separate NCB tracks.

What happens to my NCB if I switch insurance companies?

Nothing changes. IRDAI fixes the same five slabs for every general insurer, so your earned percentage carries over in full as long as you present a valid NCB certificate, with no insurer able to offer a better or worse rate at your slab.