How is the NCB calculated in car insurance?


The benefit offered under the PNE varies between a reduction of 20% to 50% of the costs of the insurance premium. The policyholder can benefit from the No Claim Bonus advantage when renewing his motor insurance policy. It is important to note that the No Claim Bonus is only applicable on all-risk insurance plans. NCB cannot be used with third party car insurance. Although most car owners know about the benefit of PNE, few know how it is actually calculated.

How is the No Claim Bonus calculated?

The No Claim Bonus is offered to car owners based on the number of insurance claim-free years they have. Once a policyholder has gone through a full policy year without making a claim, they are entitled to a 20% reduction in premium costs upon renewal. This percentage is increased to a maximum of 50% for consecutive years without claims. An individual can easily understand how the No Claim Bonus in car insurance is calculated.

Policy term No claim bonus
1 year of claim-free insurance 20% discount on premium fees
2 years of claim-free insurance 25% discount on premiums
3 years of claims-free insurance 35% discount on premiums
4 years of claims-free insurance 45% discount on premiums
5 years of claims-free insurance 50% discount on premiums

Can the No Claim Bonus be cancelled?

Yes, the policyholder will lose the No Claim Bonus benefit once they make a car insurance claim. Even though they have accumulated a claim-free bonus for many years, it will be reset after making a claim. The policyholder will then only be eligible for the No Claim Bonus basis after one claim-free year has elapsed again. The no-claims bonus in car insurance will also be removed if the policyholder does not renew their car insurance policy within 90 days from the expiration date of the original plan. To make sure you don’t lose your health bonus, renew your car insurance plan before it expires or within the grace period provided by your insurer.

No Claim Bonus Benefits

Here are the main advantages you get with the No Claim Bonus in car insurance:

  • Save on insurance premium costs

As mentioned above, stacking multiple claims-free premiums over many years can get you up to 50% off the price of your insurance premiums. This can help you save a significant amount of money in the long run.

If you’re considering a whole new insurance plan, the good news is that your no-claims bonus can be transferred or carried over to your new insurance policy. There are many online insurersso If you wish to change insurers at the time of renewal, your existing insurance company will provide you with a No Claim Bonus certificate, which can be used to defer your NCB with your new insurer.

How to avoid the cancellation of the bonus without complaint

The best way to ensure that your no-claims bonus stays intact is to avoid making insurance claims unless absolutely necessary. If there are only minor damages to your car that can be repaired inexpensively, you should make the repairs out of your own pocket. However, if the damage is immense, you absolutely must file an insurance claim. Fortunately, you can take out additional car insurance called ‘No Claim Bonus Protection’ which will allow you to make up to 2 insurance claims in a policy year without losing your no claim bonus benefit.

To conclude

No Claim Bonus or NCB is an extremely useful feature offered by insurance companies to policyholders which saves them a lot of money on premiums. Although NCB in car insurance is here to help you save money, the main reason to buy insurance is to financially protect your precious car from damage. There is a lot of car finance myths, but there is plenty of information online for all your questions. Make sure you don’t get discouraged from claiming insurance if your car is involved in a major accident, even if you end up losing your no-claim bonus.


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