An increase in the purchasing power of the buyers and the regular introduction of new two-wheeler models in the market is boosting the demand for two-wheelers in India. Features such as cost-effectiveness, high fuel efficiency and ease of navigation make two-wheelers the first choice of personal transport of many people. If you own a two-wheeler, it is mandatory to have
third-party bike insurance. It covers any damages caused to a third party individual or property in case of an accident involving the insured bike. Or, you can go for a comprehensive insurance cover to protect yourself and your bike in such a situation. However, under a comprehensive plan, you should avoid filing claims for minor dents and damages in your two-wheeler as this can affect the valuable No Claim Bonus (NCB) at the time of insurance renewal. Read on to know more.
What is NCB?
No Claim Bonus, or NCB, is an integral part of every
bike insurance policy. It is a discount that you get from the insurance company for not raising any claim. It proves that you drive safely and take good care of your two-wheeler. NCB is calculated from the completion of one year of being insured without making any claim. The minimum rate of NCB is 20% of the premium amount and it can go up to 50% of the premium that you have to pay.
Note, NCB does not apply to third-party premiums as third–party bike insurance does not cover any damage to your vehicle.
How NCB Affects the Insurance Premium?
The
No Claim Bonus plays a significant role in determining the premium amount but many bike owners are not aware of it. You should know about the difference that it would make to your long-term insurance policy.
When you make a claim for scratches or small dents, you could be wanting to save the expenses involved in making your two-wheeler look shiny and flawless. What you miss out on is that the claim would reset the NCB cycle and put you at a loss.
At the time of policy renewal, you will realise that the cost of the policy has increased and that you have lost the NCB advantage. Even a single claim can bring your NCB to zero. The increase in the premium amount could be much higher than the cost of repairing a small dent or removal of a minor scratch. So, file a claim only when there is a need for significant repairs, third-party incidents or theft.
Benefits of NCB
Insurance is a way of securing yourself against financial losses and unforeseen damages. Accidents can happen at any time and the best way to keep yourself secure and protected is by having a bike insurance cover.
Your insurance policy must be based on the value of the bike and your requirements. Unlike third-party insurance, comprehensive two-wheeler insurance offers protection to the bike and the owner or rider.
You should not look at the insurance cover as a way of paying for the repairing cost whenever you see a scratch or a minor bump on the bike. They are certainly covered but if you use the insurance policy for minor expenses, you will be increasing the amount of premium and end up paying higher than the actual cost of repairs.
The two major benefits of NCB are it reduces the premium amount payable and can be transferred when you decide to buy a new policy.
1. Lower premium amount
It is possible to save a significant amount of money through NCB. When you notice a difference in the premium amount, you will realise that NCB has helped you in a big way. You should not overlook this point while deciding whether you want to make a claim or pay for the repairs.
You should not avoid filing a claim when your bike meets with an accident or is damaged but always compare the cost and benefits. Ask a mechanic to take a look at the damage and give a cost estimation before you decide to file a claim. If the repairs are going to cost a nominal amount, you should pay for them without raising a claim. However, if the bike has gone through big damages and needs major repairs, you can file a claim without worrying about NCB.
Are you wondering how NCB is calculated? Here's how it is done:
| NCB at the time of policy purchase (%) | No claims | One claim | Two claims | Three claims | Four claims | Five claims |
| 0 | 50 | 45 | 35 | 20 | 0 | 0 |
| 20 | 50 | 50 | 45 | 25 | 20 | 0 |
| 25 | 50 | 50 | 50 | 25 | 20 | 0 |
| 35 | 50 | 50 | 50 | 25 | 20 | 0 |
| 45 | 50 | 50 | 50 | 25 | 20 | 0 |
| 50 | 50 | 50 | 50 | 25 | 20 | 0 |
|
Claim Free Years |
No Claim Bonus |
| After 1 year | 20% |
| After 2 years | 25% |
| After 3 years | 35% |
| After 4 years | 45% |
| After 5 years | 50% |
Therefore, if you opt for a five-year insurance policy that has zero existing NCB, a single claim will reduce the NCB for you. But if you are going forward with 50% of the current NCB, you will be able to enjoy discounts even after making two claims in five years.
2. NCB transfer
There is one more advantage of holding on to NCB. If you choose to replace your old two-wheeler and buy another one, you have the option to transfer the policy and carry forward NCB in your new bike insurance. It will allow you to make a good amount of savings in the new policy quote.
The process of NCB transfer is simple and fast. When you buy a new bike and sell the old one, you have to submit Form no. 29 and 30 with a letter asking the insurance company to transfer NCB. They will issue an NCB certificate which is valid for three years. If you decide to purchase the policy from a new insurance company, provide this certificate and NCB will be transferred to the new policy. The new insurance provider may check with the previous company to confirm the facts.
Conclusion
Having third-party insurance for your two-wheeler is mandatory and you can make the most of it by raising claims only when it is necessary. The insurance policy will prove to be highly effective and cost-efficient when you make claims in situations where the cost of repairs is on the higher side. Remember, for every claim-free year you will save money in the form of a reduced premium and an increasing NCB. This would further benefit you during the purchase of bike insurance in future.