How to Calculate NCB for Bike Insurance in India

NCB, or no-claim bonus, is a reward to the insured for his/her safe driving and claim-free years during the policy's tenure. This NCB rate is expressed as a percentage in your policy document. With every year that passes without a claim, you qualify for a higher NCB rate. But how do I check NCB in bike insurance?

Here, we will understand how the no-claim bonus in two wheeler insurance is calculated and the importance of NCB in bike insurance. So, continue reading to find out.

How is NCB in Two-Wheeler Insurance Calculated?

So, how to calculate NCB for bike insurance? Starting from the second policy year, you become eligible for a No-Claim Bonus if you have made no claims on your two-wheeler insurance in the first year. This is a reward for safe driving and maintaining a claim-free record.

1. Discount:

   A 20% discount on the premium awaits if you have raised no claims in the first year. This discount applies specifically to the own damage component of your insurance policy.

2. Benefit:

   For each subsequent claim-free year, the NCB percentage increases. Normally, the NCB discount progresses as follows:
1. After 1 Year: 20% discount
2. After 2 Years: 25% discount
3. After 3 Years: 35% discount
4. After 4 Years: 45% discount
5. After 5 Years: 50% discount

3. Maximising NCB:

   If you drive safely and do not make any claims for 5 consecutive claim-free years, you can enjoy up to 50% discount on your own damage portion of your premium.

Example of NCB Calculation: Rakesh pays a premium of ₹8,000 for his bike insurance. If he drives cautiously and makes no claims in the first year, he qualifies for a 20% NCB. After the 20% discount, Rakesh's premium for the second year is reduced to ₹6,400. With every passing year, the discount increases for each claim-free year for up to five years.

Why No-Claim Bonus is Important?

The No-Claim Bonus (NCB) is important for policyholders for the following reasons:

1. Rewards Safe Driving:

   NCB rewards policyholders for safe driving and not making any insurance claims during the policy period. This encourages policyholders to drive carefully, which is important for their own safety and the community's.

2. Significant Premium Discounts:

   NCB provides a significant discount on the premium amount at the time of policy renewal. This discount can start at 20% and go up to 50%. Over time, this can significantly reduce the cost of insurance.

3. Cumulative Benefit:

   The value of the NCB increases with each consecutive claim-free year. It acts as a financial incentive to maintain a clean driving record over the years.

4. Transferable:

   NCB is linked to the policyholder, not the vehicle. This means if you decide to buy a new bike, you can transfer the NCB from your old vehicle to the new one.

5. Acts as a Claim Deterrent:

   Knowing that making a claim can reset the NCB to zero, policyholders are often deterred from making small or unnecessary claims.

Conclusion

A no-claim bonus is essentially a reward for safe driving practices and refraining from making unnecessary claims. It provides significant discounts on your two-wheeler insurance premiums. However, you must keep renewing your bike two-wheeler insurance plan on time, as a lapse will lead to the NCB accumulated over the years getting reduced to zero.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.