Definition
No-Claim Bonus (NCB)
A no-claim bonus is a discount on insurance premium rewarded for not making any claim during the policy period.
A No-Claim Bonus (NCB) rewards claim-free years with a discount on your renewal premium, common in motor insurance and offered as a cumulative bonus in many health policies (often as increased cover). In motor insurance the discount rises with each consecutive claim-free year up to a cap.
Making even a small claim usually resets the NCB to zero, so for minor damages it can be cheaper to pay out of pocket and preserve the accumulated bonus. Some insurers offer an NCB protection add-on that lets you keep the bonus despite a claim.
The motor NCB is linked to you, not the car, so you can carry it to a new vehicle or transfer it when switching insurers — just obtain the NCB certificate.
Related terms
- DeductibleA deductible is the amount you must pay yourself before your insurance starts covering a claim.
- Health InsuranceHealth insurance covers medical and hospitalisation expenses in exchange for an annual premium.
- Insured Declared Value (IDV)IDV is the current market value of a vehicle fixed at policy inception — it is the maximum amount a motor insurer will pay if the vehicle is stolen or written off as a total loss.
Plain-English explainer from Investdesk Investors Encyclopedia. General information, not financial advice.