Insurance policies charge you a premium for covering your financial risks. If the risks occur and you incur a financial loss, the company pays you compensation for the loss that you have suffered. But what if you don’t suffer any loss?
Under general insurance policies, specifically motor insurance and health insurance, if you do not make a claim in a policy year, the policy rewards you in the form of no claim bonus. Let’s understand the concept of no claim bonus, its features and other important aspects –
No claim bonus, or NCB as it is popularly called, is a bonus which is allowed under health and motor insurance policies if you do not make a claim during the coverage period. This bonus either gives you a premium discount when the policy is renewed or it increases the coverage level without changing the premium. Moreover, the bonus is cumulative in nature and it increases after every successive claim-free year.
No claim bonus is available in both motor insurance and health insurance plans. However, under each plan, the bonus differs. So, let’s have a look at both these plans and their respective NCBs.
In a health insurance policy, no claim bonus can be awarded in any of the following three ways –
Usually, the sum insured is allowed to increase in most health insurance plans while in others a premium discount is allowed. The third mode of no claim bonus is found only in a few health insurance plans.
If the NCB allows an increase in the sum insured, after every claim-free year, the sum insured would continue to increase. In case of a claim, the accumulated NCB reduces. Moreover, you don’t get an NCB in the year in which the claim is made. From next year onwards, you can again start earning an NCB if no claims are made under the plan.
For example, if you opt for a sum insured of INR 5 lakhs and the no claim bonus is 10%, the following year, the sum insured would increase to INR 5.5 lakhs. If the maximum increase allowed is 50%, the sum insured would increase by 10% after each successive claim-free year till it reaches INR 7.5 lakhs after 5 claim-free years. Thereafter, even if you don’t make claims, the increase would not be allowed.
The NCB earned under health insurance plans is lost if the policy has lapsed and you do not renew the plan within the grace period. Moreover, in the case of porting, the new insurance company might not recognize the NCB accumulated in your previous policy. In that case, in the new policy, your previous NCB would be lost and you would have to start accumulating NCB again.
Here is a list of some of the best health insurance plans which offer the best NCB rates in the market-
Name of the policy |
NCB allowed |
National Mediclaim Policy |
5% increase in sum insured up to a maximum increase of 50% |
Manipal Cigna Pro-Health Protect |
5% increase in sum insured up to a maximum increase of 200% |
Religare Care Pan |
10% increase in sum insured up to a maximum increase of 50% + No Claim Bonus Super add-on is available where the increase is 50% up to a maximum of 100% |
Universal Sompo Complete Healthcare Policy |
10% increase in sum insured up to a maximum increase of 50% |
Star Family Health Optima Insurance Plan |
25% increase in sum insured in the second year and 10% thereafter, up to a maximum increase of 100% |
Aditya Birla Activ Assure Diamond Plan |
10% increase in sum insured up to a maximum increase of 50% |
Apollo Munich Optima Restore Plan |
50% increase in sum insured up to a maximum increase of 100% |
Under car and bike insurance policies, the no claim bonus is allowed as a reduction in the renewal premium. If you don’t make a claim in the policy year, you get a no claim discount which is applicable when the policy is renewed.
The rate of applicable no claim bonus discount is as follows –
Incidence of claims |
No claim bonus allowed |
No claims in the first policy year |
20% |
No claims in the two successive policy years |
25% |
No claims in three successive policy years |
35% |
No claims in four successive policy years |
45% |
No claims in five or more successive policy years |
50% |
The maximum no claim bonus allowed is limited to 50%. Even if you don’t make claims for six or more years, the rate would remain fixed at 50%
Suppose you buy car insurance plan and pay a premium of INR 15,000. If no claim is made in the first policy year, you earn an NCB of 20%. If the renewal premium is INR 14,000, you would have to pay only INR 11,200. Again in the next year, if no claims are made, the bonus would increase to 25%. If the renewal premium for the third year is INR 12,000, you would have to pay INR 9000 after applying the NCB rate. So, the bonus would keep on increasing until a claim is made.
A unique thing about the no claim bonus in motor insurance policies is that the bonus is easily transferable. Here’s how the transfer of NCB woks –
The accumulated NCB would be lost if there is a claim in any policy year. Moreover, if the coverage has lapsed and you do not renew the policy within 90 days of such lapse, the accumulated NCB would become zero.
You can take measures to protect the no claim bonus that you accumulate in your motor insurance plan. These measures include the following –
All motor insurance policies have the same NCB rates irrespective of the company. So, you can choose any policy and you would get the same rates. However, some of the top motor insurance companies which you can choose from are as follows –
So, utilise the no claim bonus if you don’t make a claim under your health or motor insurance policy and get savings in the premiums that you pay.
In health insurance plans, the no claim bonus is fixed by the insurance company itself.
The cost of the add-on depends on the insurance company. Different insurance companies charge a different premium for the NCB protect add-on and so the rates are not fixed.
Since your old car is stolen, there must have been a claim in your old policy. If the claim has been paid, the accumulated no claim bonus has been lost. So when you buy a new car the previous no claim bonus would not be allowed in the new policy.