Good conduct always gets rewarded. Be it as a kid, at home, or in the professional space—staying cautious is always worthwhile. The same analogy stands true even when purchasing a two-wheeler and its insurance. Given the road and traffic conditions in the country, bike insurance is necessary for a two-wheeler owner. What is interesting to note is the reward that one gets when they are cautious riders. When you buy vehicle insurance and do not make a claim during the entire policy period,you get rewarded for your careful vehicle usage. If you are a disciplined biker and take good care of your vehicle, you are up for a bonus from your bike insurance company.
Let us see how.
What is NCB?
NCB stands for No Claim Bonus. When you buy bike insurance and pay a premium, youare assured of coverage of losses or expenses up to the extent outlined in the bike insurance policy. If you manage to complete your bike insurance policy period without making a claim, then you are rewarded with a discount on the premium at the time of policy renewal. This benefit is called the No Claim Bonus.
NCB is indicative of disciplined riding habits and good maintenance of the bike. NCB is a tool to create deterrence towards rouge and inauthentic claims and incentivise discipline amongst the riders.
What are the Benefits of NCB?
No Claim Bonus has a multitude of benefits. Some of them are:
Lower premiums – A No Claim Bonus, as mentioned earlier, reduces the premium amount. The higher the No Claim Bonus, the lower will be the premium amount. For every year that you go claim-free, you get a discount on the premium at thetime of renewal.
A benefit to the policyholder – One of the major benefits of NCB is that the No Claim Bonus is accrued to the policyholder and not the bike. Confused? This means if you buy a new bike or sell the one you own, you would still hold the NCB till the renewal of the policy is not breached.
Transferable–The No Claim Bonus is transferable. Since it belongs to the policyholder and not the vehicle, it can be transferred. This is applicable even if the policyholder changes his/her insurer. Till proper renewal of the bike insurance is done, the NCB stays with the policyholder.
Increased savings–If no claim is made for five consecutive years, then a major discount is awarded to the policyholder each time their policy is up for renewal. It can go up as high as 50% of the premium amount.
How is NCB Calculated?
Each term, the No Claim Bonus starts at the time of your bike insurance renewal, and not when youbuy vehicle insurance for the first time. Also, NCB is not accrued over third-party liability cover. No Claim Bonus is rewarded only for own two-wheeler damage cover. For example, if you purchase the TVS insurance of ICICI Lombard, you can either buy a TVS comprehensive vehicle package policy or a standalone own damage TVS insurance policy to reap the benefits of the No Claim Bonus.
NCB is awarded on the premium amount, which is calculated based onthe Insured Declared Value or the current market value of the bike.Suppose, the NCB discount for the first claim-free year of a new bike is calculated as 20%. Then, for the succeeding claim-free year, the discount will increase by another 5-10%. Likewise, if youmanage to go claim-free for five consecutive years, then you can bag a discount of up to 50% on the premium of the bike insurance.
It should be noted that after five consecutive years of claim-free, there is no further accrual of NCB rewards on premium. After five years, even if you complete a claim-free year, there would be no reduction on the premium amount. However, by that time you would have already reaped the optimum benefit of your disciplined riding, and safe riding and careful maintenance of your bike would have become a habit.
How is NCB Transferable?
There are two important features of NCB in terms of its transfer:
- NCB can be transferred from one vehicle to another. This means if you sell your old bike and buy a new one, the NCB accrued on the claim-free disciplined usage of the old bike can be transferred to the new one—in the name of the policyholder.
- NCB can be transferred from one insurer to another. At the time of renewal, if you plan to change your insurance company, the accrued NCB is transferred and it does not lapse by the mere change of the insuring company.
How NCB Becomes Zero?
The No Claim Bonus remains valid only till the time you do not make a claim. For example, if you go claim-free for the first three years and raise a claim in the fourth year, you will get the bonus of discounted premium on your bike insurance renewal for three years, post which the NCB will be set to zero. And, you will have to pay the usual competitive premium.
So, NCB is a critical factor when buying bike insurance. The benefits of NCB are long-lasting, which is why you must try to maintain a disciplined riding history and make the best of the No Claim Bonus.