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No Claim Bonus (NCB) in Car Insurance

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What is NCB or NCD in Car Insurance?

No-Claim Bonus (NCB) or No-Claim Discount (NCD) is the reward given by the insurance company to policyholders for not making any claim during a policy period. This benefit is available to policyholders in the form of a discount on the premium payable at the time of renewing the car insurance policy. The more the number of claim-free years, the higher the no-claim bonus that you can enjoy.

The no-claim bonus in car insurance is an incentive for policyholders to be more responsible and safeguard their vehicles against accidents & theft. This reduces the burden of claims for insurance companies.

How Does the No-Claim Bonus Work in the UAE?

The concept of a no-claim bonus (NCB) is quite simple. The typical tenure of a car insurance policy in the UAE is 13 months. If you do not file any claim during this period, the insurer rewards you with an NCB benefit. NCB in insurance enables you to get discounts on premiums at the time of renewal.

In a comprehensive car insurance policy, the premium includes third-party liability coverage and own-vehicle damage coverage. The third-party liability cover is mandatory and hence NCB discount is applicable only on own-vehicle damage cover. The following example is helpful in understanding the concept.

Suppose Mr X pays a premium of AED 5,000 toward his car insurance policy. Here, the own vehicle damage premium is AED 4,000, and the balance of AED 1,000 is the premium for third-party liability insurance.

After the first claim-free year, Mr X gets a 20% no-claim bonus that is applicable to his own vehicle damage premium, i.e. AED 4,000. This translates to a cool saving of AED 800 on your car insurance premium. So, the premium payable for the next policy year is AED 3,200 + AED 1,000 = AED 4,200. If the premium and the NCB discount change in the subsequent years, the calculations are revised accordingly.

How to Calculate No Claims Bonus (NCB) in Motor Insurance?

NCD in car insurance is available to policyholders from the second year onwards. The NCB discount is typically given at the rate of 20% for the first claim-free year. The rate is then increased steadily for the subsequent claim-free years. The following chart depicts the increment in NCB over the years:


No-Claim Bonus Discount

After the first claim-free year


After two consecutive claim-free years


After three consecutive claim-free years


After four consecutive claim-free years


After five consecutive claim-free years


Note: The NCB discount is generally restricted to a maximum rate of 50%. Once you reach this limit, the sunset period commences. Despite further claim-free years in the future, the NCB discount remains capped at 50%.

Benefits of NCB in Vehicle Insurance

NCB in vehicle insurance provides several benefits to policyholders. The details are as follows:

Policyholders can enjoy significant savings in premiums ranging between 20% to 50%. This alleviates the burden of increasing premiums for people who are budget-conscious

The NCB encourages you to be cautious and safe while using your vehicle. Reduction in accidents, mishaps, and theft is beneficial for policyholders and insurers alike.

The no-claims discount is linked to the individual and not the vehicle. This benefit can be availed even if you sell your existing car and purchase a new one.

NCB benefit is portable, i.e. it can be easily transferred if you switch the insurance provider later. All you need to do is get the NCB certificate from the previous insurer and submit the same to the new insurer.

How to Transfer the NCB to the New Car Insurance?

As discussed above, the NCB benefit is linked to the vehicle owner and not the vehicle. Hence, it is possible to transfer the no-claim bonus if you switch to a different insurance company. The procedure is as follows:

Situation 1: If you switch between insurance providers either with the same or a new car.

Enquire with the new insurer whether an NCB transfer certificate is required to effect the transfer.

If the NCB certificate is required, obtain the same from the previous insurer and submit it to the new insurer along with other documents.

Please provide the details of the previous policy, i.e. name of the insurer and the policy number, to the new insurance provider.

Note: Some insurers may transfer the NCB benefit without issuing a certificate for the same.

Situation 2: If you change the car but not the insurance provider.

You can transfer the car insurance to the new owner. In case the buyer opts for a new policy and does not require the old one, you can cancel the same.

You can transfer the car insurance to the new owner. In case the buyer opts for a new policy and does not require the old one, you can cancel the same.

Documents Required for NCB Transfer

The following documents are essential to ensure a smooth transfer of no-claim bonus benefits:

Emirates ID

UAE government ID card

Registration Certificate

Copy of the vehicle’s registration certificate

Insurance policy

Valid car insurance policy documents

NCB certificate

NCB certificate from the existing insurer

Things to Know About NCB in Car Insurance

When is NCB Terminated?

The no-claim bonus in car insurance gets terminated under the following two situations.

If the policyholder makes any claim during the policy period, the NCB benefit shall be withdrawn by the insurer

If the policyholder makes any claim during the policy period, the NCB benefit shall be withdrawn by the insurer

Note: The insurer may also terminate the NCB if the policyholder sells the vehicle and fails to transfer the NCB to another insurer or policy within a specified period

Is NCB Applicable to Third-Party Insurance?

NCB is not applicable to third-party liability insurance. This is a mandatory cover that provides protection to vehicle owners against legal claims from third parties arising due to the insured vehicle. Hence, there are no benefits or add-ons associated with third-party insurance. 

However, policyholders can claim NCB on the ‘own damage premium’ if they purchase a comprehensive car insurance policy.

Frequently Asked Questions on NCB in Motor Insurance

You can avail of the no-claim bonus in car insurance at the time of renewing the policy and obtain attractive discounts on the premium payable.

NCB in insurance is given only in respect of claim-free years. If you file any claim during the year, you will lose the benefit irrespective of the size of your claim.

No. NCB in vehicle insurance is linked to the individual. It can be transferred to the new insurance policy if you buy a new car or change the insurer.

NCB is not applicable to third-party liability insurance. Hence, third-party claims have no effect on the no-claim bonus.

Insurers generally terminate your NCB if you raise any claim during the policy period. If you have five or more claim-free years, it’s a wise move to purchase the no-claims discount protection and safeguard your benefits. This is an add-on cover that involves an extra premium. It helps you retain the bonus despite making some claims during the period.