New Delhi, Aug. 31 -- A small scratch on your car can create a bigger dilemma than the repair bill itself: should you claim it from your insurer and risk losing the no-claim bonus (NCB) you have built up over years, or pay for the repair yourself?

That trade-off is built into conventional motor insurance. NCB is a discount on the own-damage (OD) premium that a policyholder earns for every claim-free year. It starts at 20% after the first claim-free year and can rise to 50% after five consecutive claim-free years. The benefit also carries over when a policyholder switches insurers at renewal. It applies only to the OD component of the premium; third-party insurance premiums are not eligible for NCB.

Typically, once a claim is made, the a...