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What is No Claim Bonus?

No Claim Bonus is the discount that the insurer gives you for a claims-free year. The No Claim Bonus increases every claims-free year up to a maximum of 50% discount.

Apnainsurance.com Research Bureau

28 Nov 2007

Let us assume you have made no claim on your car insurance policy this year. As a reward, the insurance company grants you a discount in premium (on the Own Damage part of the premium) on your policy renewal. This discount is called the No Claim Bonus. This bonus is offered only if the motor insurance policy is renewed within 90 days of expiry of the previous policy.

If you have made no claim in the first year, you get a bonus of 20 per cent; for two consecutive years, the bonus is 25 per cent; for three consecutive years, it's 35 per cent; for four consecutive years, 45 per cent, and for five consecutive years, the bonus is 50 per cent. It is offered up to a maximum of 50 per cent.

An important fact that you must remember is that if you make an insurance claim, the No Claim Bonus reduces to nil on renewal and not the previous year's discount. For instance, let's say that you have had three consecutive claims-free years and you availed a 35% No Claim Bonus. Now, in the fourth year, you have an accident and you make a claim. When you renew your policy in the fifth year, you do not get any discount; you have to pay the full premium.

See also:

Voluntary Deductibles and Compulsory Excesses

What is Malus?

What if I forget to renew my auto insurance on time?

Motor Insurance FAQs on Claims

Motor Insurance FAQs on Coverage

Motor Insurance FAQs on Cost, Premiums, Bonus, Discounts, Renewals