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No-Claim Bonus (NCB) is a discount on the premium offered by the insurance company subjected to the condition that the insured has not made a single claim throughout the policy term.

What Are The Benefits Offered Under NCB?

 NCB comes with different benefits for the individuals, and some of them are mentioned below:

  • Easily transferable: It is one of the most important benefits that can be drawn under NCB. In this case, the insured is the sole owner of the NCB, and if he/she wants to change the previous insurer, then NCB can be transferred to the new insurer.
  • Compensatory benefit: NCB functions in such a way that it acts as a compensation for the individuals. If a person does not claim or use an insurance facility, then (s)he is entitled to receive the benefit in the form of compensation (discounted premium) for not availing claim in that year.

Documents Required To Transfer NCB

To transfer No-Claim Bonus to the insurance company, here are some of the important documents:

  1. Transfer Application
  2. Photocopy of the bike insurance
  3. Buyer-Seller Agreement (Form 29 and Form 30)
  4. Copy of delivery note
  5. Copy of booking receipt
  6. Copy of moving old registration certificate
  7. NCB Certificate

How Does NCB Calculation Take Place?

Calculation of NCB is directly proportional to claim-free years. In other words, the percentage of discount varies with the number of claim-free years. 

Note: NCB is exclusively applied to the Own Damage component of your premium. This is the premium calculated based on IDV or Insured Declared Value of the bike minus the bike’s cost of wear and tear. Also, the bonus does not apply to the third party cover premium.

Below given is the table representing the discount offered under NCB:

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%

The table mentioned above presents a crisp and clear percent (discount) offered under No-Claim Bonus by the insurance companies depending upon the number of unclaimed years. This is very helpful as it lowers down your premium for upcoming months.

What if you Get a Claim Processed During The Policy Term?

In case someone gets a claim for a two-wheeler in the policy tenure, then the insured cannot take advantage of No-Claim Bonus (NCB).

For a better understanding, let’s take an example. There are two members- Rahul and Sohan. Both of them are owners of two Royal Enfield Model Classic ABS Redditch Edition DD (350CC) bikes. 

Rahul did not make any claim after the first policy year, whereas Sohan made a claim. They both pay premium according to the following scale mentioned in the table below: 

Tenure

Insured Declared Value (IDV)

Premium to be Paid (HDFC ERGO)

Rahul

Sohan

1st year

Rs.1,45,000

Rs. 6,545

Rs.6,545

Rs. 6,545

2nd year

Rs.1,30,500

Rs.6,436

Rs.5,148 (20% discount under NCB for having 1 claim free year)

Rs. 6,436

*Here the IDV depreciates by 10% per year

The above table simplifies the fact that both the vehicle owners made the payment, but Rahul gets the no-claim bonus through a decreased percentage of premium in the second year. Whereas, Sohan claimed within the policy year and was not entitled to avail no-claim bonus discount in the second year.

Under What Circumstances NCB Gets Terminated?

Mentioned below are some of the situations where No-Claim Bonus might get terminated:

  • The renewal of the bike insurance policy should be made within 90 days from the actual date of policy expiration, failing which, the NCB gets terminated.
  • In case a claim has been made during the policy year, the NCB is considered terminated as you cannot avail of the benefit of the bonus.

Important Aspects

There are some of the important aspects that need to be considered to reap the benefits of No-Claim Bonus:

  • In case of cancellation of a two-wheeler insurance policy before the completion of the tenure, the NCB goes into waste.
  • For NCB transfer (from old two-wheeler to new two-wheeler), you are required to present a retention letter, which is to be submitted to the insurer.
  • The discount earned under NCB can’t be shared between two different policies.

No-Claim Bonus is an additional benefit provided by the insurance companies. It's cumulative in nature and totally depends on the claim cycle(s) of the insured.

Naval Goel is the founder of PolicyX.com. He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.
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