How to Calculate NCB in Bike Insurance?

What is No Claim Bonus (NCB) in Bike Insurance?

NCB or No Claim Bonus is a discount or savings on premiums offered by motor insurance companies to bike owners for not raising any claims during the policy period. It is granted as a reward for driving safely and can be accumulated on every consecutive claim-free year. No Claim Bonus in two wheeler insurance ranges from 20% to 50% and can be accumulated for a maximum of five claim-free years.

No Claim Bonus only applies to own damage or comprehensive bike insurance policies. Bike owners with a third party bike insurance policy will not receive any NCB even if they do not raise any claims. However, in case of the bike owner's death, the NCB is granted to the nominee.

Importance of No Claim Bonus in Bike Insurance

No Claim Bonus encourages safe driving. It is a trick that insurers use to motivate drivers to ride or drive safely on the roads. The safer they drive, the lower will be the claims. In return, insurance companies reward them with an NCB bonus, which can be redeemed to lower their bike insurance renewal premium.

How Does NCB Work in Bike Insurance?

No Claim Bonus or NCB works in case of a claim-free policy year. The insurance providers offers an NCB discount as a reward to the policyholder for every claim-free year, starting from 20%. The rate of NCB increases by 5-10% every year on not raising claims for up to a maximum of 50% discount on the premium after five consecutive claim-free years.

Let us understand this with an illustration:

Imagine Raj owns a bike and pays a premium of ₹15,000. If he does not initiate a claim in the first year, he will earn an NCB of 20% on his renewal premium amount. As a result, his two wheeler insurance premium will reduce from ₹15,000 to ₹12,000 due to the 20% NCB bonus. If he does not file a claim in the second year as well, his NCB percentage will increase to 25%.

The NCB discount applies to own damage cover and is not available for third-party liability insurance. However, your NCB will turn to ZERO as soon as you file a claim.

How is No Claim Bonus (NCB) Calculated?

Two wheeler insurance companies reward policyholders with NCB as per the slabs for different claim-free years shown in the table below:

Advantages of No Claim Bonus (NCB) in Bike Insurance

Take a look at the key benefits of NCB in bike insurance:

• Reduces the Premium: NCB helps to significantly reduce bike insurance premiums as insurers grant a minimum discount of 20% and a maximum discount of 50%. Thus, NCB helps to make two wheeler more affordable.
• Develops Riding Skills: NCB is a token of appreciation that policyholders receive from their insurance provider. The zeal to earn NCB every year develops their riding skills and makes them skilled drivers.
• Easy to Transfer: NCB is granted to the bike owner, not the vehicle. Therefore, even if the bike owner switches to a new insurer or changes the bike, the NCB is transferred to the new insurer or the new bike. That means if the policyholder has earned an NCB of 45% from their existing insurer, it is easily transferable to the new insurer at the time of renewal. However, the terms and conditions are to be followed.
• Saves Money: With NCB, bike owners are able to save money as they end up paying a discounted renewal premium. The longer they do not file a claim, the more they are able to save over time.

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When is NCB Terminated?

NCB or No Claim Bonus turns to ZERO when either of these situations occurs:

1. If the bike owner has filed a claim during the policy year, their acquired no-claim bonus will be terminated. Hence, they will not be eligible for a discount on the next year's policy premium.
2. In case the policyholder has not renewed the policy within 90 days from the actual date of policy expiration.

Let us understand the termination of No Claim Bonus with the help of the following example:

A & B are two different individuals who bought the same bike model, Bajaj Avenger Street 160. They both have purchased the same comprehensive two wheeler insurance cover to protect their prized possession for a premium of ₹12,000. While A does not claim in the first policy year, B makes a claim. In this case, A is eligible for an NCB benefit of 20%, whereas B is not. Here is how the no-claim bonus will work for both of them:

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Things to Remember About NCB in Two Wheeler Insurance

Check out a few things to remember about NCB in two-wheeler insurance:

• NCB is lost as soon as you file a claim under your two wheeler insurance policy.
• Always renew your policy on time. The NCB earned will be dissolved if you miss renewing your bike insurance policy within 90 days from its expiry date. No NCB means no more discount on the premium.
• You cannot share the discounts earned between two different policies. It can be used only in one policy at a time.
• In case you cancel your two-wheeler policy before the completion of its tenure, the NCB earned for a particular year could be well spent.
• An NCB retention letter or NCB certificate has to be submitted to the insurer in case you want to transfer your NCB from the old two-wheeler to a new two-wheeler policy in the same category.
• NCB can be used within three years of selling the existing bike and replacing it with a new vehicle.
• NCB can be recovered if the name on the RC of the vehicle is transferred.