No Claim Bonus in Two Wheeler Insurance
Buying two wheeler is always special and requires quite an investment. When you invest a huge portion of your hard-earned money in your newly bought possession, insuring it is the best way to ensure its safety. If paying the premium is your concern, how does a bonus to reduce your insurance policy premium sounds? If you are new in the world of "Insurance" then let us tell you about No Claim Bonus (NCB) or the handsome reward on the premium that you can earn by playing a little smart.
What is NCB in Bike Insurance?
No Claim Bonus is a reward offered by your motor insurer in case you don’t claim your two wheeler insurance during the policy tenure. It is a saving on the premium provided by the insurance provider as a reward to the policyholder for using his bike responsibly and maintaining it in good condition. All you need to do is to find a bike insurance plan that offers suitable NCB to save on premiums.
Now that you know what is NCB in two wheeler insurance, let's know more about this insurance jargon to make the most of it.
How Does NCB Work for My Bike?
No Claim Bonus is a reward offered by the bike insurance provider for not claiming any insurance during a policy tenure. It can be availed as savings on the premium. The NCB ranges from a minimum of 20% to a maximum of 50%, with an increase at every consecutive claim-free year. This means the NCB can be accumulated and the total percentage can be used to save huge on premiums. However, you can get this saving at the time of renewal only.
Moreover, NCB in two wheeler insurance is only applicable on own damage premium and not on third party premium. Therefore, you need to have a comprehensive bike insurance plan or standalone own damage cover to avail NCB savings.
How is NCB Calculated in Bike Insurance?
The No Claim Bonus for your bike starts with the first renewal of your comprehensive bike insurance policy. A savings of 20% is granted on successfully renewing your two wheeler insurance policy after the first claim-free year. Every year, the bonus percentage increases by 5-10% during renewals if you don’t make any claims in the previous year. The bonus can be accrued to increase the overall savings percentage at the end of every claim-free years.
The following table shows how to check NCB in bike insurance based on the number of claim-free years:
|Policy Tenure||Percentage of NCB|
|1st claim-free year||20%|
|2nd claim-free year||25%|
|3rd claim-free year||35%|
|4th claim-free year||45%|
|5th claim-free year||50%|
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Take look at this example for better understanding: You get 20% NCB after your first bike insurance renewal for not making claim. You decide to retain it and not use it. Then after the second claim-free year, your percentage increases to 25%. Similarly, the NCB increases to 35% and 45% after the third and fourth claim-free renewals. Ultimately, you get 50% NCB after five consecutive claim-free years. Now, you decide to use the NCB savings on your premium amount and pay only half the amount. Thus, you end up getting higher savings on your premium by accumulating and using your NCB after five consecutive claim-free years.
However, the NCB will not increase after five consecutive claim-free years. Thus, you should use your NCB after the fifth renewal and restart your NCB cycle from the next renewal.
What are the Benefits of NCB in Bike Insurance?
No Claim Bonus provides the following benefits to the policyholder under two wheeler insurance:
- It helps to reduce the premium amount from a minimum of 20% to a maximum of 50% if no claims are made in the previous policy years.
- It is granted solely to the policyholder for prudent use of his bike and thus, remains with him irrespective of whether he sells his bike or changes his motor insurer.
- It can be easily transferred from one insurer to another or from one bike to another in case you decide to change your bike or your insurance provider.
- It acts as compensation or reward for not using the motor insurance facility in the policy year despite paying the premium amount.
- It encourages bike riders to drive their bikes safely.
Can I Use No Claim Bonus on Two Bikes?
You can’t use the acquired No Claim Bonus on two different bikes at the same time. But if you sell the older bike and buy a new one, you can shift the NCB earned on your old bike to the new one. This is because NCB belongs to the policyholder, not the vehicle and thus, remains with him even if the bike is sold off.
How is NCB Transferred to Another Bike?
NCB in two wheeler insurance can be transferred or retained with you in case you replace your existing bike with a new one or if you want to change your existing insurance provider when the renewal is due. Transfer of NCB is an easy victory. Let’s imagine you bought a Royal Enfield bike in 2016 and the premium you pay is Rs. 18000. Out of the total premium, Rs 15000 goes towards own damage cover. If you haven’t claimed your insurance so far, you can claim 45% NCB at the time of policy renewal. If you decide to switch the insurer on the same premium and use your NCB acquired with the previous insurance, you will be required to pay only Rs 12,000, instead of Rs 18,000.
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If you want to transfer your NCB to your new bike then you’ll be required to submit Form 29, 30, accompanied with the application requesting for transfer of the NCB addressed to the existing insurer. On the basis of this, the insurer will issue an NCB certificate with a validity of three years. You’ll need to submit the certificate to the new insurer so that the NCB can be utilised.
In case you buy two-wheeler insurance online, the certificate wouldn’t be required, as a declaration would suffice. However, you shouldn’t hide any circumstances under which a claim was made, as the new insurer will verify every single detail with the previous insurer. At any point, if it finds you guilty, the insurer can reject your application.
Can I Get NCB on Third Party Bike Insurance?
No Claim Bonus is only associated with Own Damage or Comprehensive cover. Hence, you can’t avail it if you own a 3rd party two wheeler Insurance only, irrespective of how many claim-free years you have.
When is the NCB Terminated?
Your NCB in bike insurance will be terminated in two situations. First, when you make a claim during the policy tenure and secondly if you don’t get your policy renewed within 90 days of your actual renewal date. Either of these incidents will lead you to lose your NCB and turn the acquired NCB into ZERO.
How Long is NCB Valid in Case of Two-Wheeler Insurance?
The NCB in two wheeler insurance is valid for two years. It means that your NCB expires in two years. So, in case you are off the road for any reason and have not possessed a policy for more than 2 years, you’ll have to start from the beginning and earn NCB again whenever you take a bike insurance policy.
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Getting the Most Out of NCB in Bike Insurance
While buying your bike insurance policy, you never back down when negotiating for savings, freebies or the financing aspect. Here the insurance aspect seems to take a backseat. However, it is somehow possible to save on the premium offered by utilising the NCB in the right way. Here are certain things to follow to get the most out of your NCB benefit:
- In case of selling the old vehicle, ensure that only the ownership is transferred and keep a copy of the new entry in the RC book for future reference.
- After receiving the delivery note, send a copy of the same to the insurance provider. Based on this, the insurer will issue an NCB certificate which will be valid for 3 years.
- This certificate has to be sent to the dealer from whom you are planning to buy your new vehicle. They will process the transfer process with the new bike insurer.
- If you’re buying online, don’t ignore checking the various available options and compare them keeping the NCB in mind, along with the other aspects.
- While switching the policy, the existing insurer will provide you with the proof of no claims at the end of the term or during the bike insurance renewal, which should be provided to the new insurer
- It is advisable not to switch your insurer unless it is necessary. Remain with the same insurer and not claim your insurance so that you can earn as much NCB as possible.
Can I Make a Claim and Still Retain my NCB?
You can retain your NCB in bike insurance despite making a claim if you have ‘No Claim Bonus Protection’ as an add-on cover. With this cover, you can make insurance claims up to the number specified by your insurer without losing your NCB. However, you need to check with your insurer if they offer this add-on cover at the time of buying insurance as not all motor insurers offer it. Besides, you must go through the terms and conditions of the policy carefully.
The Final Word!
There you have it - one of the most important aspects of two wheeler insurance, the NCB benefit. It is the element that helps in reducing the policy premium. It also makes you a skilled driver or rider, by enabling you to master the skill of riding safe and not making any claims for small damages. In turn, it helps to earn more credibility and rewards from the insurer. However, you should consider buying a bike insurance policy that comes with a good deal on NCB to save more on the premiums.