Bike Insurance with NCB Discount

Do you remember your childhood? Like, when you were 5 or 6 and your Dad would tell you that if you behaved well the whole day, studied hard and did not make a nuisance, you would get a treat candy? A No Claim Bonus (NCB) is like that, a candy for being a good disciplined biker.

Now you may ask, what has a bonus got to do with good bike riding, right? If you have bought a bike insurance, but you have driven safely and maintained the bike properly, then you will not need to raise an insurance claim, because there is no damage to make a claim for!

Now insurers say that if you drive safely, and do not raise a claim for a year, on your policy renewal, you will receive a discount on the premium. This discount is called a No Claim Bonus.

Formally, an NCB is defined as a discount on premium awarded to the policyholder for not making a claim during the policy year. To deter rogue claims and instill some type of discipline, the concept of No Claim Bonus was introduced (though we love claims and helping out people!).

The good news is, if you continue with the good behavior and touchwood your bike never faces any issues, damages or accidents, then you can accumulate your No Claim Bonuses over the years. We will see little later, how well this works for your pocket.

Can you transfer the NCB when you buy a new Bike?

Yet another good news is, the accumulated NCB bonus is like the famous pug, it goes with you wherever you go. That is, it is transferable from your old vehicle to new vehicle, if you decide to buy a new bike, as long as you remain the policy holder. Your NCB is for YOU as the policy holder and not for your bike.

How is my NCB calculated?

Your no claim bonus kicks in ONLY after the first renewal of your comprehensive two wheeler insurance policy. (Do note, NCB exclusively applies to Own Damage component of your premium, which is the premium calculated based on IDV or insured declared value of the bike minus the cost of bike’s wear and tear. The bonus does not apply to third party cover premium).

You begin with receiving a 20% discount on your premium after the first claim-free year. The discount increases by 5-10% at the time of policy renewal each year. In other words, each year that you do not raise a claim in, the discount is accrued, almost as if the reward for policy holder’s good behavior keeps getting meatier.

For example, if you got 20% NCB at the end of first policy year and you do not make a claim in the second year either, the discount on your premium will go up to 25-30%, then 30-35% in the consecutive year and so on. This way, you can get up to 50% discount on your premium in 5 years.

Be not greedy because after five years, the discount will not increase, even if you don’t raise a claim in a year. Now let us see how this calculation works with a simple example.

You bought a suave high-speed bike in 2010. There could not be another ideal biker a.k.a policy holder in the world like you. You paid your premium on time. You did not raise a claim in the first year, or the second year…or the fifth year.

Now, you thought, you have had enough of this bike. You sell this bike and instead bring home another slick model in 2015. You have along with your new bike, got your bike insurance as well. Suppose the own damage premium for the new vehicle is Rs.3000. But you have accumulated NCB for 5 years. So you will get up to 50% discount on the premium for your new vehicle. You will only have to pay Rs.1500 for own damage premium!

When do I lose the NCB?

The NCB is reset to zero once you have raised a claim, irrespective of whichever year of your policy it is. Is there an exception to this? Of course, there is. If you have an NCB protection feature added in your policy, then this rule will not apply.

What if I change my insurance provider when I buy a new vehicle?

To be honest, we would hate to see you go. But go, if you must, the NCB is transferrable to new vehicles and new insurers, provided you continue to be the policy holder. Only you will need to get a clearance certificate from your previous insurer to allow the NCB transfer to another insurance company.

Can I pass on the NCB to a family member or friend?

No dear do-gooder, you cannot. NCBs are awarded to you as a policy holder and they cannot be transferred to another person, even when you sell your bike. The only exception to the rule is death of the policy holder, in which case, the NCB will be transferred to the nominee.

Pro Tip! Keep Your NCB. Let go of small change. In other words, in the long run we have seen that making a claim for small damages to the vehicle, that is totally affordable, will make you lose on a substantial chunk of discount on your premium, because the NCB, on even making a single claim will switch back to zero, which looking at the larger picture, will be a bigger financial loss. So it is best to keep your NCB alive and settle minor damages without raising a claim.

Is there a way I can make a claim and still retain my NCB?

There is, depending on whether your desired insurance company provides the benefit or not. If your insurer allows it, you can go for an NCB Protect add-on as part of your comprehensive policy. With this feature, you can make a specific number of insurance claims (mostly just one) in a year without losing your no claim bonus. Some insurers may also put a condition on the number of years you should have gone without making a claim on your policy before the protection feature kicks in.

So, the next time you are in the mood for some bike racing, remember there is a No Claim Bonus waiting for you on the other side of self-control. Also worth remembering is the fact that this reward is transferable to new vehicles and new insurers. So wisdom says, drive safe, raise no claim unless you really need to and keep reaping the no claim bonuses coming your way!