Two numbers decide most motor insurance outcomes: the No Claim Bonus (NCB), which lowers your premium, and the add-ons you attach, which raise it but define how much of a claim the insurer will actually pay. Understanding both is how you stop overpaying for protection you never get to use.

Read more: Motor Insurance in India: Navigating Change in 2026.

No Claim Bonus: The Reward for Not Claiming

NCB is a discount on the own-damage (OD) portion of your premium for every claim-free year. It compounds:

  • 20% for the first claim-free year, 25% after two, 35% after three, 45% after four, and a maximum of 50% after five years.
  • It is transferable to a new insurer when you switch (the new insurer will credit NCB on proof of your no-claim record).
  • It is transferable to a new vehicle you buy within a reasonable period, on your own name.

Claims wipe it out: one payable OD claim (a claim you filed and were paid for) resets OD premium to zero discount. Key nuance: own-damage claims reset NCB; a long-term third-party claim does not reset NCB in many products, and 'no claim' means no OD claim.

The Add-Ons Actually Worth Money

1. Zero Depreciation (nil dep): The most valuable add-on. Standard policies pay repair costs minus depreciation (up to 50% on rubber/plastic parts). Zero dep covers repairs at full cost — worth it for new cars and for cars under 5 years old. Not recommended for very old vehicles where the premium scales up to near-worthless.

2. Engine Protection: Covers engine damage from water-logging, dirt, oil leakage — crucial in flood-prone cities. Typically worth adding with zero dep.

3. Return to Invoice: In a total loss, standard policies pay IDV (market value). Return-to-invoice tops it up to the original on-road invoice price for a 2-3 year premium — strong value for new vehicles.

4. Roadside Assistance (RSA): Towing, flat-tire, jump-start services. Cheap, and priceless on trips. (Scout the insurer's towing coverage area before paying.)

5. Consumables Cover: Nuts, bolts, oil, coolant, brake fluid — small items that can be surprisingly large when reimbursed fully.

6. Key Replacement & Lock: Covers key/lock replacement after theft or loss of car keys.

Add-Ons Usually Not Worth It

No-Claim-Bonus protector: Lets you make one claim without losing NCB — but the add-on premium often equals the NCB you are protecting. Run the numbers before buying. Passenger cover beyond the mandatory amount may be redundant if you and family are already on a personal-accident plan.

How to Optimise

  • Always renew on or before the due date — an uninsured gap resets everything, and your NCB will not transfer if the policy lapses.
  • Declare voluntary deductible (a small self-pay amount) to lower premium if you are a safe driver.
  • Choose 'standard' repairs network versus cash settlement based on claim frequency.
  • Transfer NCB and claim-free record to the new insurer when switching — do not leave it behind.

For most private car owners, the winning combination is comprehensive cover + zero depreciation + engine protection + RSA, with a voluntary deductible, renewed on time every single year.

Source: BimaNiti analysis, IRDAI/BAJAJ guidance (2026)