NCB is an important term that people often come across while buying or renewing their insurance policy. The full form of NCB is No claim Bonus. Insurance companies generally offer this benefit when a policyholder does not make a claim during the policy period. NCB can help reduce the premium at renewal. However, the NCB works between car insurance and health insurance. Understanding these differences helps policyholders make decisions about differences in the policies.

What is the Full Form of NCB?

NCB stands for No Claim Bonus. It is a reward discount that insurance companies give for not filing any claims during a policy year. An insurance company may recompense a policyholder for not raising a claim during the policy period. Think of it as a financial high-five for safe driving and taking good care of your health. While the core concept is almost identical – rewarding you for remaining claim free. NCB works slightly differently in vehicle insurance compared to health insurance.

NCB in Car Insurance

In car insurance, NCB mainly rewards for having a claim-free policy year. If you do not make a claim during the policy period your insurer may provide an NCB discount when someone renews the policy.

Let’s understand this with an example, suppose the eligible OD (Own-Damage) premium is Rs. 10,000. If you receive a 20% NCB you may pay Rs. 8,000 for that portion of the premium with respect to the policy terms. NCB percentage can change depending upon the insurer and the number of claim-free years.

How does NCB work in Car Insurance?

In car insurance, NCB directly reduces your policy renewal premium. This discount applies to the OD (Own Damage) portion of your premium, not the mandatory third-party cover.

• Percentage-Based Savings: The discount starts at 20% after the claim-free year and the discount increases gradually up, to a maximum of 50% after five successive claim-free years.

• Tied to the Driver, Not the Car: The NCB belongs to an individual not your vehicle. If someone is selling the car and buying a new one you can transfer the accumulated discount to the new policy.

• The Reset Factor: Making a single claim usually resets the NCB back to 0% for the next renewal, unless you have an NCB protection add-on.

NCB in Health Insurance

NCB in health insurance works differently from car insurance. Health insurers may reward claim-free years by increasing the policy’s sum insured through a collective bonus or no-claim bonus. Some policies may offer few more benefits.

Let’s understand this also with an example, suppose the health insurance provides a base sum insured of Rs. 5 Lakhs and If the purchased policy is offering a 10% cumulative bonus for a claim-free year the insurer may increase your coverage according to the policy conditions.

How NCB Works in Health Insurance?

In Health Insurance, NCB generally expands the coverage instead of reducing the purchased premium plan.

• Higher Sum Insured: Usually, health insurers raise the total coverage amount by ten percent to fifty percent for each claim‑free year at no extra cost until the maximum cap is reached.

• Premium Discounts: Some health insurance providers give you a discount on your renewal premium instead of raising the sum insured.

• Impact of a Claim: If you are filing a claim, the insurer reduces the accumulated NCB by a set percentage in that year whereas the original base coverage always stays intact.

Read more: Benefits of POSP in Insurance

Conclusion

NCB stands for No Claim Bonus and rewards policyholders for maintaining a claim-free insurance record. In car insurance, NCB generally helps reduce the eligible premium at renewal. In health insurance, it may increase the sum insured or provide another benefit, depending on the policy.

Before buying or renewing insurance, always check the NCB rules, maximum benefit, effect of claims and other conditions. A clear understanding of NCB can help you choose suitable coverage and make better renewal decisions.