NCB Full Form in Insurance: Meaning and Benefits Across Health and Motor Cover
Most policyholders notice the premium first, not the reason behind it. One year, the renewal amount looks lower, the next year it jumps without warning. Hidden inside that number is a small term with a large impact on what you pay and what you receive from your policy. NCB full form in insurance is No Claim Bonus.
Let’s read more about NCB in insurance, in detail.
What is NCB in Insurance?
A No Claim Bonus (NCB) is a reward offered to policyholders who do not make any claims during a policy year. It is usually provided as a discount of 20 percent to 50 percent on the own damage portion of the insurance premium. The discount increases with every consecutive claim-free year. This can typically be up to a maximum of five years.
NCB in Health Insurance
No Claim Bonus in health insurance is a benefit that rewards a policyholder for not making any claim during a policy year. For every claim-free year, the insurer increases the sum insured by a fixed percentage, without increasing the premium in most cases.
NCB in Motor Insurance
In motor insurance, No Claim Bonus reduces the Own Damage premium at the time of renewal. NCB is linked to the policyholder, not the vehicle, so the accumulated benefit can be transferred to a new car when the old one is sold.
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How is NCB calculated?
NCB is calculated as a percentage discount on the own damage premium or as an increase in the sum insured.
The percentage rises with each claim-free year, usually starting at 20 percent and reaching up to 50 or 100 percent.
No Claim Bonus Calculation in Motor Insurance
In motor insurance, No Claim Bonus is calculated only on the own damage portion of the premium.
Typical No Claim Bonus slabs
| Claim Free Years | No Claim Bonus Percentage |
| After the 1st claim free year | 20 percent |
| After the 2nd consecutive claim free year | 25 percent |
| After the 3rd consecutive claim free year | 35 percent |
| After the 4th consecutive claim free year | 45 percent |
| After the 5th consecutive claim free year | 50 percent |
No Claim Bonus calculation example
If the total premium is ₹15,000, it usually includes ₹12,000 as the own damage premium and ₹3,000 as the third party premium. After five consecutive claim free years, a 50 percent No Claim Bonus applies on the own damage premium. This gives a discount of ₹6,000 on ₹12,000.
So, the final premium payable becomes ₹9,000, calculated as ₹12,000 minus ₹6,000 plus ₹3,000. If any claim is made during the policy year, the accumulated No Claim Bonus is usually reduced or reset to zero at the next renewal.
No Claim Bonus Calculation in Health Insurance
In health insurance, No Claim Bonus is usually added to the sum insured instead of being given as a premium discount.
For example, if your base cover is ₹10 lakh and the No Claim Bonus rate is 20 percent per claim-free year, one claim-free year increases your cover by ₹2 lakh, taking the total to ₹12 lakh.
If the policy allows accumulation up to 100 percent, the sum insured can grow to ₹20 lakh over multiple claim-free years, without any increase in premium.
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Types of No Claim Bonus
No Claim Bonus is offered in different formats.
| Type of No Claim Bonus | Commonly Seen In |
| Cumulative No Claim Bonus | Health insurance, some motor policies |
| Premium Discount No Claim Bonus | Motor insurance, select health plans |
| Super or Enhanced No Claim Bonus | Health insurance |
| Hybrid No Claim Bonus | Health insurance |
| Loyalty-Based No Claim Bonus | Health insurance |
- Cumulative No Claim Bonus– Under this type, the sum insured increases by a fixed percentage for every consecutive claim-free year. The premium usually remains the same.
- Premium Discount No Claim Bonus- Here, the benefit is offered as a discount on the renewal premium instead of an increase in coverage. This type is widely used in motor insurance.
- Super or Enhanced No Claim Bonus- This is an accelerated form of cumulative bonus. The sum insured increases at a much higher rate, sometimes up to 50 percent or 100 percent after just one claim-free year. It is mainly available in select health insurance plans.
- Hybrid No Claim Bonus- A hybrid No Claim Bonus combines two benefits. The insurer may offer a partial increase in sum insured along with a reduction in the renewal premium. The exact structure varies by policy.
- Loyalty-Based No Claim Bonus- This bonus rewards long-term association with the insurer. It may offer additional coverage benefits after a certain number of continuous renewals and, in some cases, may continue even if minor claims are made.
Benefits of No Claim Bonus
No Claim Bonus offers long-term financial advantages to policyholders across both health and motor insurance.
Here is a simpler, more conversational version that sounds natural and easy to read.
Lower premium outgo
In motor insurance, No Claim Bonus reduces your own damage premium at renewal. If you do not make claims for a few years, the discount keeps increasing and your insurance becomes cheaper.
Higher sum insured in health insurance
In health insurance, No Claim Bonus usually increases your sum insured instead of cutting the premium. You get better medical coverage without paying extra, which helps as hospital costs rise.
Encourages responsible behaviour
NCB pushes people to drive carefully and avoid unnecessary claims. It also encourages smarter use of health insurance instead of claiming for every small expense.
Transferable benefit
No Claim Bonus belongs to you, not the insurer or the vehicle. You can transfer it when you buy a new vehicle or when you switch your health insurance policy.
Better long term value from the policy
Over time, claim free years add up. This means real savings in motor insurance or much higher coverage in health insurance.
Financial security when risk increases
In health insurance, accumulated No Claim Bonus gives higher cover in later years, when medical needs usually increase.
Overall, No Claim Bonus rewards discipline, lowers costs, and improves coverage, making it one of the most valuable benefits in an insurance policy.
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How to Apply No Claim Bonus
The process of applying No Claim Bonus depends on whether you are renewing with the same insurer or changing the insurer or policy.
- When renewing with the same insurer
If no claim was made during the policy year, the No Claim Bonus is applied automatically at the time of renewal. In motor insurance, it reflects as a discount on the own damage premium. In health insurance, it usually appears as an increase in the sum insured or a premium benefit. You should always check the renewal notice to confirm that the benefit has been applied correctly.
- When switching insurers or porting a policy
If you are changing your insurer, you need to declare your claim-free history while purchasing the new policy. In motor insurance, the previous insurer may issue a No Claim Bonus certificate after verifying that no claims were made. This certificate is submitted to the new insurer to apply the bonus.
In health insurance, the No Claim Bonus is generally transferred during the portability process based on your past policy records.
No Claim Bonus is not just a discount; it is a long-term reward for disciplined insurance behaviour that quietly reduces costs or strengthens coverage over time. Understanding how NCB works helps you renew smarter, claim wisely, and extract real value from both health and motor insurance.
NCB in Insurance – FAQs
A 20% NCB is usually awarded after the first claim free year.
It offers either a 20 percent increase in sum insured or a 20 percent renewal premium discount.
In medical insurance, NCB means No Claim Bonus.
It is a financial reward for claim free years and not a medical or clinical term.
There is no single number one insurer, as rankings depend on claims, coverage, and service quality.
In India, insurers like HDFC ERGO, Star Health, and Niva Bupa are widely trusted.
HMO plans require treatment within a fixed network and referrals for specialists.
PPO plans offer more flexibility to visit doctors outside the network but cost more.
Yes, especially for high sum insured policies where the bonus adds significant value.
An NCB Protect add on helps retain benefits even after small claims.
The maximum NCB is usually capped between 50 percent and 100 percent of the base sum insured.
Some enhanced plans may allow higher accumulation over multiple claim free years.
A 50% NCB is usually the maximum reward level, offering a 50 percent discount on the own damage premium or a 50 percent increase in the health sum insured.
A 25% NCB is a mid level bonus earned after two consecutive claim free years.
It reduces the premium or increases coverage.
A 45% NCB is a high tier benefit generally achieved after four claim free years in motor insurance.
A 2 year NCB generally offers a 25 percent discount in motor insurance or a 20 to 25 percent increase in health cover.
Insurance for a ₹20 lakh car typically ranges between ₹40,000 and ₹70,000 per year.
The final premium depends on the model, location, add-ons, and insurer pricing.
The first party is the policyholder, the second party is the insurer, and the third party is any affected outsider.
A 12 month insurance policy provides coverage for one full year from the start date.
It must be renewed annually to continue benefits such as NCB and legal protection.
Full coverage is generally better as it protects your own vehicle against accidents, theft, and fire. Liability only covers third-party losses and leaves you exposed to personal repair costs.
