What is No Claim Bonus in Bike Insurance?

What is No Claim Bonus in Bike Insurance? Square Insurance - 23 Feb 2023

No Claims Bonus (NCB) is a discount benefit provided, if no claim has been made during the period of insurance policy.It is an incentive offer for the customers who do not raise any claim in their policy period. For every year if a claim is not made a NCB is given between 20% - 50% for successive 5 years.

How to Calculate NCB in Bike Insurance

  • Percentage in No Claim Bonus (NCB) of bike insurance online claim process is calculated on the basis of claim free years. IRDAI (Insurance Regulatory and Development Authority of India) has set some limits of discounts offered to the insurer by the insurance company.
  • No Claim Bonus provides complete cover which helps in buying a bike insurance premium.
  • No Claim Bonus turns zero if any single claim is made , irrespective of the past unclaimed records.The percentage of No Claim Bonus increases as per claim free years but after 5 years the discount will cease.

Read - Importance of Bike Insurance

To understand No Claim Bonus Claim process calculation we can take an example.

Suppose there are two bike owners Mr. X and Mr. Y both of them have taken similar comprehensive covers for their vehicle. Mr. X does not make any claim but Mr. Y does.In this case Mr. X becomes eligible for 20% benefit whereas Mr. Y NCB has turned zero. Mr. Y will pay the whole premium amount and no discount will be given to him.

Function Of NCB

NCB discounts are applied only for self damage cover.Third party liability is not included in No claim Bonus. The reason behind NCB was to make people aware about traffic rules and teach discipline to the riders. And if no claim is filled during the policy year then as a premium discount NCB is given.

Advantage of No Claim Bonus(NCB) in Bike Insurance

During the policy period if you do not make any claim, you get to collect NCB on your bike Insurance and receive benefits in following ways

Reduce Premium Price

If no raise is claimed during the policy period, No Claim Bonus offers a discount in paying renewal premium. So, financial benefit is given while policy renewal.It motivates the customers to drive safely and stick to the traffic rules.

Easily Transferable

  • The NCB earned and no register claim benefits are earned by individual customers who want to switch the insurance company from one to another; they can enjoy its benefits from anywhere.
  • This charge percentage may vary from company to company. Hence, the insurance plan must be checked before buying. Online Bike insurance provides you with lots of discount offers to compare and select your policy suitable to your requirements.

What is Add on Cover in No Claim Bonus

No Claim Bonus protection add - in cover is an optional cover to safeguard NCB which might get affected from raising a claim. Generally, NCB is given when no claim year is successfully passed, where the vehicle is damage free the whole year. Thus, If any single claim is even raised you might lose the chance of getting NCB benefits. For that reason, If No Claim Bonus (NCB) protection Cover is added , then you can register for a claim without any breakage of NCB claim.So, if the customer has this add-on cover , they can make a claim without any worry of losing benefits.

What is included in NCB Add on Cover Protector

  • It is available for comprehensive Bike insurance.
  • It protects NCB while you can raise claims.
  • Two claims can be raised under add on cover.
  • Renewal policy will be completed by the same insurer as the add on cover .

What Is exclusion in NCB Add on Cover

  • Ineligible Claims are not acceptable.
  • Claims cannot be raised in case of theft and total loss.
  • Fraudulent damages related claims can be raised.
  • Raising Claims has Limits.

How to transfer NCB to new bike Insurance?

If the customer buy new bike and if he needs to transfer his NCB to his new bike following steps must be taken

  • Insurers must be informed about the changing bike insurance plan.
  • Submit your NCB transfer certificate to the new insurer and pass a delivery note to the new buyer.
  • Seller and Buyer agreement forms must be submitted.
  • Policy premium must be paid to the new bike insurance plan and discount cost can be enjoyed.

No Claim Bonus (NCB) Transfer documents

Documents required to transfer NCB from old insurance to existing bike insurance
  • Primarily , Insurers must be informed about the changing of the bike insurance plan with the new one.
  • NCB transfer certificate from the old company. (This is needed to get access for the registration of insurance plan from the new buyer. )
  • Buyer / Seller Agreement Form. (This is an agreement form between a buyer and seller which is needed by the customer to show the approval for further policy plan.)
  • Delivery Note from the new Buyer to get NCB Transfer Certificate.

In what case does NCB get Canceled/Terminated/Not available?

No Claim Bonus can be canceled or terminated for following reasons
  • If the claim is made during insurance tenure.
  • If the policy is not renewed within 90 days of expiry date,otherwise the NCB will turn zero.
  • NCB is available for comprehensive Bike Insurance Policy. And It is not available for Third party Bike Insurance Plan.

Important points to know about NCB

NCB works as a gift provided by the insurer for every claim free year. It should be kept in mind that NCB can be claimed only if the bike insurance policy is renewed regularly that is within the expiry date of the previous policy which is approximately 90 days.

NCB is only given for its own damage’s component, not for thirty party cover.

Bike Insurance Claim rule says that the scale of NCB rises each year as

20% for the first year for no claim, which increases by 25% in the second year, 35% for third year, 45% for fourth year and 50% for 5 claim free years.

Year No Claim Bonus Discount (%)
For first claim free Year 20%
Second claim free Year (continuous) 25%
Third claim free Year (continuous) 35%
Forth claim free Year (continuous) 45%
Fifth claim free Year (continuous) 50%

And if any claim is registered during the insurance policy year the NCB will turn zero.

NCB is added to the customer’s account, which means if earlier the customer had a claim free 3 years and now he wants to buy a new bike then you can use that collective NCB benefit for the first premium of the new vehicle.

We can also understand with an example, if a customer buys a bike in 2008 and pays all his premium bills regularly, renews all the policy on time and claims free insurance for 5 years. He sold the vehicle in 2013 and bought a new one, for which the premium rate is rs.2,000. And suppose the own damage component for the premium is rs. 1, 500 .Then, because of earlier 5 years of NCB, the customer gets 50% discount for his new vehicle premium that means he has to pay rs.1000 instead of full amount rs. 2000.

If the insurance is taken online then you can claim for an NCB certificate which will be provided by the insurer. This may help you transfer NCB from one vehicle to another incase the insurance provider is getting changed.

Customers should try not to make any bike insurance claim or any damages to the vehicle because 1 claim can make your NCB value again zero and no discount will be provided until next year of the premium.

To make your NCB stronger customers can opt for protection and add on cover. Add on cover works for certain conditions like you don't have to claim at least for two years, only 1 own damage can be adjusted in a year, total loss claim cannot be accepted.

Also Read - Ways to Get Discounts on Bike Insurance