Glossary · Insurance
No-Claim Bonus
A discount or reward given by the insurer on the renewal premium if the policyholder does not make a claim during the previous policy year.
In health insurance, NCB is a cumulative bonus of typically 5-10% increase in sum insured for every claim-free year, up to a maximum of 50-100% of the base sum insured. The original premium does not reduce but the cover grows. In motor insurance, NCB is a discount on the premium (20-50%) that can be transferred to a new insurer. NCB is forfeited if a claim is made in a year, making it a strong deterrent against small claims.
Examples
A 5-year-old health policy with a 5-lakh sum insured grows to 7.5 lakh after 10 claim-free years at 5% NCB compounded annually.