No Claim Bonus, or NCB, is the discount you earn on your own-damage premium for every claim-free year — growing step by step up to 50% after five or more consecutive claim-free years. For a long-term owner, that discount is often worth more than any single small claim. And the fastest way to lose it is letting the policy lapse.
The good news is that a lapse does not immediately destroy your NCB — there is a grace window, and NCB can also be carried across insurers and even across vehicles when you upgrade. This guide explains the 90-day rule, the transfer process, the inspection required for lapsed comprehensive cover, and the practical steps to protect your bonus. Insurance is the subject matter of solicitation, and NCB slabs, grace periods and transfer rules are governed by the respective insurer’s terms and applicable regulations.
What No Claim Bonus is and how it grows
NCB is a reward for not making a claim during the policy year. It applies as a discount on the own-damage component of your premium — not on the regulated third-party component. The commonly applied slabs are: 20% after one claim-free year, 25% after two, 35% after three, 45% after four, and 50% after five or more consecutive claim-free years. Exact slabs can vary by vehicle type and insurer terms.
Two features make NCB especially valuable. First, it compounds over time — a 50% discount on own-damage premium is a substantial annual saving on a comprehensive policy. Second, NCB belongs to the owner, not to a specific vehicle or insurer, which is what makes it transferable when you switch insurers or buy a new car.
What happens when your policy lapses
A comprehensive policy that is not renewed before expiry stops providing own-damage cover immediately — there is no automatic grace period for the cover itself. Driving with lapsed third-party insurance is a legal offence, attracting fines and leaving you personally exposed to third-party liability. A lapse also interrupts the continuity benefits some insurers offer, such as reduced waiting on certain covers.
The financial consequence that surprises most owners is the NCB. If the policy stays lapsed beyond the grace window, the accumulated bonus resets to zero — meaning a 50% discount can vanish entirely, and the next policy starts from slab one again.
The 90-day rule: your window to retain NCB
The widely applied practice is that NCB is retained if the lapsed policy is renewed within 90 days of expiry. Renew within that window and your accumulated bonus carries forward to the new policy period; let the lapse run beyond 90 days and the NCB typically resets to zero. The exact treatment can vary by insurer and applicable rules, so it is worth confirming with the insurer — but the practical rule of thumb is simple: treat 90 days as the outer limit, and renew as early as possible.
Note that the 90-day window protects the NCB, not the cover. The vehicle remains uninsured during the lapse, and a claim-free lapse is still a lapse — comprehensive cover only resumes after renewal and, where required, a break-in inspection.
Transferring NCB when you switch insurers
Because NCB belongs to the owner, you can carry it to a new insurer at renewal. The new insurer typically asks for proof of your claim-free years — commonly the previous policy’s renewal notice or an NCB certificate or reservation letter issued by the previous insurer. With that evidence, the new policy is issued with your correct NCB slab applied.
This is also why comparing insurers at renewal is safe: you do not lose your bonus by moving to a different insurer offering a better premium or better terms for the same cover. An advisor can run the comparison across leading insurers while keeping your NCB slab intact.
Carrying NCB to a new car or bike
NCB can also be transferred to a new vehicle that you buy — the bonus follows the owner, not the old vehicle. When you sell your old car or bike, ask the insurer for an NCB certificate or retention letter for the claim-free years you accumulated. That certificate is commonly valid for a defined period — often up to three years — and can be applied to the policy for your new vehicle.
This matters most when upgrading: a 50% NCB earned on an old hatchback can be applied to the comprehensive policy of the new car, reducing its premium meaningfully. Do note that NCB cannot be sold with the old vehicle — a buyer does not inherit your bonus, and the old policy’s NCB does not transfer to them.
Break-in inspection for lapsed comprehensive cover
When a comprehensive policy has lapsed, insurers generally require a break-in inspection of the vehicle before reinstating own-damage cover. The inspection — often done digitally, with photographs or a video survey — records the vehicle’s condition so that pre-existing damage is not claimed later. Third-party cover can typically be issued immediately, but own-damage cover starts only after the inspection is accepted.
The inspection is usually quick, but it is a real requirement: skipping it or concealing damage can affect later claims. If your policy has lapsed, the sequence is: get the inspection done, renew the policy, and confirm that both third-party and own-damage cover are active before driving.
Preventing NCB loss in the first place
The cheapest strategy is never to test the 90-day rule. Renew before the expiry date — a reminder a week ahead is enough. If the renewal premium is the concern, compare insurers with your NCB intact rather than letting the policy lapse.
The second strategy is claim discipline. For minor damage — a cracked mirror, a small dent — compare the repair cost against the NCB you would forfeit by claiming. Paying a small repair yourself often costs less than resetting a 50% bonus to 20%. That arithmetic, not habit, should decide whether a claim is worth making.
Common mistakes to avoid
Assuming a short lapse is harmless — the cover stops immediately, and NCB dies beyond the grace window.
Renewing a lapsed policy late and assuming the NCB survived; confirm the applied slab on the renewed policy.
Selling a vehicle without obtaining the NCB certificate, and losing the bonus earned over years.
Skipping the break-in inspection or concealing existing damage when reinstating lapsed comprehensive cover.
Making small claims without weighing them against the NCB that will be reset.
Want guidance tailored to your situation?
This guide is for general understanding only and does not constitute financial advice. Book a free, no-obligation consultation with Bappaditya Nath for help specific to your needs.
