How to Calculate NCB in Bike Insurance?

What is NCB in Bike Insurance?

No Claim Bonus or NCB in bike insurance 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.

Simply put, No Claim Bonus in bike insurance is a discount on the own-damage component of your premium at the time of renewal.

If you continuously maintain a claim-free record, NCB in two wheeler insurance accumulates year after year, helping you save substantially on premiums.

Key Highlights of NCB in Bike Insurance

• It is offered only on own-damage or comprehensive bike insurance.
• It ranges from 20% to 50%.
• It increases with every consecutive claim-free year.
• Remember, it belongs to the policyholder, not the bike or scooter.

Importance of No Claim Bonus in Bike Insurance

The primary purpose of no claim bonus in bike insurance is to:

• Encourage safe and responsible riding for all the two wheelers in India.
• To reduce fraudulent or unnecessary bike insurance claims.
• Get reward low-risk policyholders with lower premiums.

The longer you ride without filing a claim, 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 basis. 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 an insurance premium of ₹15,000. If he does not make any claim in the first year, the insurer rewards him with a 20% No Claim Bonus (NCB) at the time of renewal. Because of this, his renewal premium comes down from ₹15,000 to ₹12,000.

If Raj again does not file any claim in the second year, his NCB increases to 25%, which means he gets an even higher discount on his next renewal.

It's important to note that the NCB discount is applied only to the own-damage bike insurance portion of the bike insurance premium and not to third-party bike insurance. Also, if Raj files even one claim, his accumulated NCB becomes ZERO, and he will not get any discount in the next policy year.

How to Calculate NCB for Bike Insurance?

NCB Discount = Own Damage Premium × Applicable NCB Percentage

Example of NCB Calculation for Bike

Suppose your own-damage premium is ₹10,000:

• After 1 claim-free year (20% NCB): You pay ₹8,000
• After 3 claim-free years (35% NCB): You pay ₹6,500
• After 5 claim-free years (50% NCB): You pay ₹5,000

This is the standard NCB calculation for bike policies across insurers in India.

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

How to Check NCB in Bike Insurance?

You can easily verify how to check NCB in bike insurance using the following methods:

• Check your bike insurance policy document.
• Refer to your NCB certificate issued by the insurer.
• Log in to your insurer's official website or contact their customer support.

Knowing your existing NCB in bike insurance helps you avoid incorrect premium calculations during bike insurance renewal.

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.

You may like to Read: What is IDV and NCB in Two Wheeler Insurance?

When is No Claim Bonus Not Applicable?

No claim bonus in bike insurance is terminated in the following cases:

• Third-party two wheeler insurance policies only.
• When a claim is filed during the policy year.
• If the policy is not renewed within 90 days of expiry or the given grace period of the policy.

However, in case of the policyholder's death, the accumulated NCB bike insurance benefit can be transferred to the nominee.

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:

You may like to Read: Mistakes That You Must Not Make While Buying Bike Insurance

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.