Motor insurance is meant to protect you from unexpected financial loss, but not every scratch, dent, or minor repair warrants an insurance claim. In some cases, paying for the repair yourself may actually leave you better off financially. Experts say one of the most important factors to consider before filing a claim is your No Claim Bonus (NCB). NCB is a reward insurers offer for every claim-free policy year, applied as a discount on your own-damage premium at renewal.
“The discount typically starts at 20 per cent and can gradually increase to 50 per cent over successive claim-free years. NCB belongs to the policyholder, not the vehicle, so you can transfer it when you buy a new car or switch insurers,” said Aditya Kumar, Motor Underwriting Head, Digit Insurance.
Assuming a base own-damage premium of Rs 30,000, the table below illustrates how No Claim Bonus can significantly reduce your premium over successive claim-free years.
|
No Claim Year
|
NCB Discount %
|
Discount Amount (Rs)
|
Premium After NCB (Rs)
|
|
1st Year
|
20%
|
6,000
|
24,000
|
|
2nd Year
|
25%
|
7,500
|
22,500
|
|
3rd Year
|
35%
|
10,500
|
19,500
|
|
4th Year
|
45%
|
13,500
|
16,500
|
|
5th Year
|
50%
|
15,000
|
15,000
|
Before making a claim, it’s worth calculating whether the amount you receive is greater than the value of the NCB you may lose.
Let’s understand this with an example
For example, assume your own-damage premium is Rs 30,000, and you have accumulated a 35 per cent NCB after three claim-free years. This gives you a discount of Rs 10,500, reducing your own-damage premium to Rs 19,500. Now imagine your car suffers minor damage and the repair bill comes to Rs 5,000.
“Filing a claim may result in the loss of your accumulated NCB at the next renewal. In that case, paying Rs 5,000 out of pocket could be a better financial decision than risking a discount worth Rs 10,500. On the other hand, if the repair estimate runs into tens of thousands of rupees, claiming under your policy is the smarter choice,” Kumar added.
NCB Protect add-on
For drivers who have built up a strong NCB discount over the years, an NCB Protect add-on can add peace of mind. This feature lets policyholders make a claim without losing their entire accumulated no-claim bonus. Some insurers may even allow you to retain the NCB or reduce it only partially after a claim.
Before filing a claim, look beyond the immediate repair bill. Comparing the repair cost with the NCB you stand to lose can help you make a smarter financial decision and get more value from your car insurance over time.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)
