No Claim Bonus (NCB)

How Does NCB Work?

If you go a year without raising a claim, your insurer acknowledges this with a bonus. In motor insurance, it's usually a discount on your renewal premium. In health insurance, it can either increase your sum insured or reduce your premium for the next term.

Health Insurance Example

If you hold a ₹5 lakh policy and don’t make any claims, an NCB of 5% would increase your coverage to ₹5.25 lakh at no extra cost. Over time, this added cushion can be valuable without raising your premium.

Key Features of NCB

• Transferability: You can carry your NCB when switching insurance providers.

• NCB Protection Add-on: For an extra premium, some insurers allow you to make claims without losing your accumulated bonus.

• Cumulative Benefit: NCB builds up over consecutive claim-free years.

Benefits of No Claim Bonus

• Lower Premiums or Higher Cover: A reward for being cautious or staying healthy.

• Encourages Good Habits: Safe driving or preventive healthcare is rewarded.

• Flexibility: Can be transferred if you change insurers.

Challenges to Be Aware Of

• Resets on Claim: Even a single claim may reset your NCB to zero unless you have protection.

• Needs Consistency: Only consecutive claim-free years count towards building NCB.

• Add-On Cost: NCB protection comes at an added premium.

Conclusion

NCB is a smart incentive that can lead to meaningful savings or better insurance coverage. In 2025, whether you're driving safely or staying healthy, maintaining a claim-free record helps you make the most of your insurance. Just one more reason to think twice before making small or unnecessary claims.