Calculating the No Claim Bonus (NCB) on your car insurance is a straightforward process. Still, it requires understanding a few key rules set by the Insurance Regulatory and Development Authority of India (IRDAI).
The NCB is a discount you receive on your premium for every year you drive without making a claim.
1. The Golden Rule: NCB is Applied Only to the Own Damage (OD) Premium
The most crucial step is knowing what the NCB is calculated on.
- NCB IS Applied To: The Own Damage (OD) component of your comprehensive policy. This is the portion of the premium that covers damage to your car.
- NCB IS NOT Applied To: The Third-Party (TP) component of your policy, which is mandatory and fixed by the government. It is also not applied to the premium for any Add-ons (like Zero Depreciation or Roadside Assistance).
2. The Standard NCB Slab Rate
The discount percentage is fixed and increases progressively up to a maximum of 50%. The discount begins after the first claim-free year.
Consecutive Claim-Free Years
NCB Discount Percentage on OD Premium
| Consecutive Claim-Free Years | NCB Discount Percentage on OD Premium |
|---|---|
| After 1st Year | 20% |
| After 2nd Year | 25% |
| After 3rd Year | 35% |
| After 4th Year | 45% |
| After 5th Year (and beyond) | 50% (Maximum) |
3. Step-by-Step NCB Calculation Example
To see how much you actually save, follow these simple steps:
Example Scenario:
- Total Premium: ₹20,000
- Third-Party (TP) Premium: ₹5,000
- Own Damage (OD) Premium (The base for NCB): ₹15,000 (₹20,000 - ₹5,000)
- Your NCB Status: You have completed 3 consecutive claim-free years.
The Calculation:
- Find Your Discount Percentage: For 3 claim-free years, the NCB discount is 35%.
- Calculate the NCB Amount:
NCB Amount=OD Premium×NCB Percentage
NCB Amount=₹15,000×35%=₹5,250 - Calculate Your New Final Premium:
New Premium=Total Premium−NCB Amount
New Premium=₹20,000−₹5,250=₹14,750
By driving safely for three years, you saved ₹5,250 on your renewal premium!
When Do You Lose Your NCB?
Your accumulated NCB is instantly reset to zero if:
- You file any Own Damage (OD) claim during the policy period, no matter how small the repair cost is.
- You fail to renew your car insurance policy within 90 days of its expiry date.