A no-claims bonus (NCB) is a discount granted to a policyholder under a comprehensive car insurance policy for every claim-free year. The NCB provides several benefits to vehicle owners, including:

• Lower Premium: The reward consists of a discount on the car insurance premium that can be applied at the time of car policy renewal next year. For every claim-free year, the NCB discount percentage is granted to the policyholder. This discount can be used to reduce the premium amount that he is supposed to pay at the time of renewing his car insurance.

• Earn Rewards: No Claim Bonus is considered proof of being a responsible driver and maintaining the good condition of the insured car. Thus, the policyholder can earn rewards in the form of NCB by not making any claims during his previous policy tenure.

• Transferable to Another Car/Insurer: The No Claim Bonus can be easily transferred to another car if the policyholder changes his car. Moreover, it can also be transferred from one insurer to another if the car owner decides to buy insurance from another motor insurance company. The policyholder will require an NCB Certificate from his/her previous insurer to get the NCB transferred.

The exact amount of discount changes depending on the insurance company, and the more NCB a policyholder has, the more the discount increases. Protected no-claims is an add-on feature for a car insurance policy that lets a policyholder make a certain number of claims in a year before their no-claims bonus is impacted. However, this comes at an extra cost.

It is worth noting that if a policyholder makes a claim, their NCB gets nullified. Insurers should provide proof of a policyholders bonus at the end of their policy term, which can be passed on to their next provider when they switch.