Saving Money with No-Claim Bonus: The Impact on Third-Party Insurance

Saving Money with No-Claim Bonus

No-Claim Bonus (NCB) is crucial in determining your car insurance premium, including the third party car insurance component. Insurance providers offer a discount to policyholders who have not made any claims during the policy term. NCB is designed to encourage safe driving habits and reward policyholders who maintain a good driving record. 

In this blog, we will explore the impact of NCB on third-party insurance and how it affects the policyholder’s premium. Through a comprehensive analysis of NCB and its benefits, this blog will help you understand the power of NCB in reducing the cost of your car insurance and maximizing your savings.

How Does NCB Work?

NCB works by offering a discount on the policyholder’s car insurance premium for each claim-free year. Depending on various factors, the discount percentage usually increases with each successive claim-free year, ranging from 5% to 50%. As a policyholder with a higher NCB percentage, you will be eligible for a lower premium for your car insurance.

What Is The Impact of NCB on Third Party Car Insurance?

Third party car insurance, mandatory by law, does not qualify for an NCB discount. Typically, third-party liability insurance premium makes up to 20% of the total premium. As a result, the NCB percentage is calculated on the total premium minus the third-party liability premium. This is crucial as car owners may mistakenly believe they have received an inadequate NCB discount due to calculating it on the total premium instead.

Does That Mean NCB Is of No Use?

The benefits of NCB for policyholders are numerous, as it provides a cost-effective way to reduce the cost of your car insurance. The main advantage of NCB is the significant reduction in premium that policyholders can enjoy, as they become eligible for higher NCB discounts with each claim-free year. This can lead to substantial savings, especially for policyholders who have maintained a good driving record over a longer period.

Another benefit of NCB is that it encourages safe driving habits. Policyholders aware of the potential savings they can achieve through NCB are more likely to drive safely and avoid making claims. This helps to reduce the likelihood of accidents and, in turn, keeps the cost of car insurance low for all policyholders. As a result, NCB is an effective incentive for policyholders to maintain a good driving record and avoid making claims, which benefits the policyholder and the insurance provider.

Factors Affecting NCB

Several factors can affect NCB and impact the policyholder’s premium. A few important ones are mentioned here.

1. Claims history: The number and frequency of claims made can impact your NCB, as it can result in a reduction or loss of NCB discount.

2. Age of the policyholder: Some insurance providers may have age restrictions on NCB, which can impact the policyholder’s premium.

3. Vehicle type: Different vehicle types may be eligible for different NCB discounts, impacting the policyholder’s premium.

4. Location: The location where you use your vehicle can also impact your NCB, as different regions may have different insurance regulations and NCB structures.

How to Make the Most of NCB and Reduce the Cost of Your Car Insurance

Here are some tips for you as a policyholder on making the most of NCB and reducing the cost of your car insurance.

  • Drive Safely: Avoid making claims and drive safely to accumulate NCB and receive higher discounts on premiums.
  • Regular Policy Review: Review your policy regularly to ensure you receive the maximum NCB discount possible.
  • Keep Claims History Clean: Minimize the number and frequency of claims made to maintain a good claims history.
  • Transfer NCB: If you change your vehicle or insurance provider, check if NCB can be transferred to the new policy.
  • Opt for a Higher Deductible: Consider opting for a higher deductible to reduce the premium and maximize NCB savings.
  • Pay Premiums on Time: Regular and timely premium payments can also impact NCB and overall premiums.
  • Be Honest with Claims: Be honest with claims, even if it means losing NCB discount in the short term, as dishonesty can have long-term negative consequences.


In conclusion, No-Claim Bonus significantly impacts car insurance premiums. NCB provides policyholders several benefits, including substantial premium savings and encouraging safe driving habits. However, there are also restrictions and limitations on NCB, such as NCB not applying to third party car insurance; and various factors that can affect the policyholder’s NCB and premium. As a policyholder, you should be aware of these factors and understand the terms and conditions of your NCB, so they can make informed decisions about your car insurance and maximize the savings they can achieve. 


The No-Claim Bonus (NCB) system offers discounts to policyholders with a good driving record and has not made any claims on their car insurance policy. These discounts can result in significant savings on car insurance premiums. However, it is pertinent to note that NCB will not be available on third party car insurance component. Policyholders should understand the factors that impact their NCB and regularly review their NCB status to ensure they receive the maximum NCB discount possible. NCB is an important tool for policyholders to manage the cost of their car insurance and plays a critical role in the insurance industry.