How is No Claim Bonus (NCB) Calculated for Bike Insurance?

What is No Claim Bonus in Bike Insurance?

No claim bonus or NCB bike insurance is a reward given by the insurance companies to the policyholders who do not make any claims during the policy term. The accumulated no-claim bonus can be availed in the form of a discount on the insurance cost.

It is important to note that no claim bonus/NCB bike insurance is applicable only on the own damage cover of the bike insurance. It does not apply to the mandatory third-party liability insurance.

How is No Claim Bonus Calculated in Bike Insurance?

No claim bonus starts getting accumulated from the first year of renewal of your comprehensive bike insurance policy. For each claim-free year, no claim bonus is accumulated. As soon as you make a claim, the no-claim bonus comes back to zero. Here is a no-claim bonus slab for bike insurance:

• 1st claim free policy year: 20% No claim discount
• 2nd claim-free policy year: 25% No claim discount
• 3rd claim-free policy year: 35% No claim discount
• 4th claim free policy year: 45% No claim discount
• 5th claim free policy year & beyond: 50% No claim discount

No claim bonus accumulated for five consecutive claim-free years can reduce your bike insurance premium by up to 50%.

Let us understand the calculation of the no-claim bonus in two-wheeler insurance with an example. Take the case of Raj, who pays INR 5,000 on the own-damage part of comprehensive bike insurance. At the end of the first claim-free policy year, Raj gets a no-claim bonus of 20%. Let us look at the calculation:

Bike insurance premium – INR 5,000

No claim bonus - 20% of INR 5,000 = INR 1,000

Hence, the renewal premium is INR 4,000 (INR 5,000 – INR 1,000) if Raj claims no claim bonus.

Let us assume Raj does not make any bike insurance claims for the next four years and accumulates the no-claim bonus. Here is how it would impact his premium at the end of five years:

Bike insurance premium (own damage cover) – INR 5,000

No claim bonus is 50% of INR 5,000 = INR 2,500

Hence, the revised premium (on own damage cover) would be INR 2,500 (INR 5,000 – INR 2,500).

Bike Insurance Claim and No Claim Bonus

If Raj makes any claim ( regardless of the bike insurance claim amount) during the period of no-claim bonus accumulation, the no-claim bonus becomes zero immediately. Let us say Raj has accumulated no claim bonus for three years, i.e. 35% and does not claim the benefit at the time of renewal. During the fourth policy year, Raj’s bike gets damaged in an accident. The repair cost comes up to INR 7,000. As soon as Raj makes this claim, 35% of the claim bonus (nearly INR 1750) is wiped out.

However, having a no-claim bonus protection add-on can keep the accumulated benefit intact even after making a claim.

Transfer of No Claim Bonus

Bike insurance is portable. You can switch the insurance company and port the bike insurance. When you do that, the accumulated no-claim bonus can be transferred to the new policy.

No claim bonus can also be transferred to the new vehicle. As no claim bonus is not linked to the bike but linked to the policyholder, it can be transferred to the bike owner’s new vehicle. For example, Raj has accumulated 50% of a no-claim bonus in the last five years on his bike insurance. He decides to sell his bike and buy a new one. In this case, no claim bonus of 50% can be used while insuring a new vehicle, and the premium can be reduced by 50%.

Important Tips to Retain No Claim Bonus in Bike Insurance

Here are some important tips to retain the no-claim bonus and use it at the right time:

• Renew your bike insurance on time without any delay or policy expiry.
• Avoid small claims. Weigh the repair cost with the benefit that you get in terms of no claim bonus and make a smart decision.
• Consider opting for no-claim bonus protection as an add-on.

When you are availing the bike insurance online, it is vital to compare various plans and consider add-ons as per your affordability and needs to make the right choice. You can explore bike insurance plans from various insurance companies on Jio Insurance Broking, compare them side-by-side on the basis of features, cost, benefits and add-ons to make an informed choice.

Conclusion

To sum up, no claim bonus is a powerful reward given the insurance companies to good and responsible drivers. Understanding the no-claim bonus slab rates, how it is calculated, and when you can utilise this to bring down your insurance cost can help you make wise decisions.