How is NCB Calculated 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 to a bike owner by motor insurance companies if the owner had not made any claims during the policy period. In case of the insured's death, the NCB benefit is granted to the policyholder's nominee. 

Significance of No Claim Bonus in Bike Insurance

No Claim Bonus encourages safe driving. It is a trick of insurers to motivate the drivers to ride or drive safely on the roads, leading to no claim. In return, insurance companies pay a reward called an NCB bonus, which can be redeemed by paying a lower premium at the time of own-damage policy renewal.

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Advantages of No Claim Bonus (NCB)

As of now, you know that NCB is a reward offered from the insurer for not claiming your two-wheeler insurance. It hosts certain benefits:

• Works as a Reward: It is a token of appreciation that you receive from the insurance provider. The zeal to earn NCB every year develops your riding skills and makes you a skilled driver.
• Easy to Transfer: Remember, an NCB always belongs to you, not the vehicle. Therefore, even if you switch to a new insurer, it goes along with your vehicle. That means if you have earned an NCB of 45% from your existing insurer, it is easily transferable to the new insurer at the time of renewal. However, the terms and conditions are to be followed.
• Reduces the Premium: If you are planning to sell the old bike and buy a new one, the acquired NCB will help you get a bike insurance at a reduced rate. For this, you have to connect with your insurance company.

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How to Calculate NCB for Bike Insurance?

No Claim Bonus or NCB works in case of a claim-free year. This discount applies to own damage cover and is not for third-party liability insurance. The rate of NCB increases by 5% every year for every claim-free attempt you make. Let us understand this with an illustration:

Imagine owning a bike with an IDV of Rs. 1 Lakh, with a premium of Rs. 15,000. If you do not initiate a claim in the first year, you will earn an NCB of 20% on your premium amount during the renewal of own-damage policy. Simply, you will pay Rs. 12,000, not Rs. 15,000, considering the 20% NCB bonus on the premium.

A maximum of 50% discount on the premium to be availed in case you don't make a claim. The No Claim Bonus comes with a comprehensive cover, which reduces the bike insurance premium by allowing the insured to apply these bonuses.

However, remember this, your NCB turns to ZERO even if a single claim is made, irrespective of how long you have restrained yourself from claiming the insurance. Let us assume:

A & B are two different individuals, and both buy the same bike model, Bajaj Avenger Street 160. They both have purchased the same comprehensive cover to protect their prized possession. When A does not claim in the first policy year, B makes a claim. In this case, A is eligible for the NCB benefit of 20%, whereas B is not. In case they both pay the premium of Rs. 12,000 individually, here's how the applied no-claim bonus will work for both:

When is NCB Terminated?

No claim bonus turns to be ZERO when either of these situations occurs:

• If you have claimed during the policy year, your acquired no-claim bonus will be terminated. Hence, you will not be eligible for a discount on the next year's policy premium.
• In case, you have not renewed the policy within 90 days from the actual date of policy expiration.

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How Does No Claim Bonus Affect Your Premium Calculation?

The insurance providers offers a discount as a reward to the policyholder for every claim-free year. Here is how the actual no-claim bonus slab for different claim-free years. The below table simplifies how no claim bonus works and how helpful it is:

A Little Advice can Go Long Way!

While deciding on NCB in two-wheeler insurance, you should consider a few things:

• Always renew your policy on time. The NCB gained will be dissolved once you miss renewing the 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 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.
• 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.

Over to You!

To save on the premiums, you must drive safely and restrain yourself from claiming your two-wheeler insurance policy. This way, you can maximise your No Claim Bonus benefit and enjoy an affordable yet extensive policy coverage.