What is no-claim bonus in an insurance policy?

Let's understand what is a no-claim bonus in an insurance policy

1. Policyholders are eligible for a no-claim bonus (NCB) only if no claim is made in the previous policy year.

2. If Policyholders don’t make any claims in the previous policy year, the insurer can increase the sum assured by 5-50% at no additional cost.


3. Some policies offer cumulative bonuses up to 100% or more over a few claim-free years.

4. If a claim is made in a subsequent year, the bonus may reduce partially or completely, depending on the insurer’s terms.

5. NCB acts as an incentive for individuals to maintain good health and avoid unnecessary claims.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.