Why Is It Important to Understand the Term No-Claim Bonus in Bike Insurance?

All bike owners need to compulsorily buy a two-wheeler insurance policy. This requirement is as a result of compliance to the Motor Vehicles Act whereby all vehicles registered in the country need to mandatorily obtain an insurance for them. There are two types of policies that can be bought – a third-party policy and a comprehensive plan.

A third-party cover is also known as liability-only plan since it safeguards the policyholder, i.e. you, against legal liabilities due to third persons. However, it has limitation in its coverage and thus not suitable for all. Here’s where a comprehensive bike insurance policy comes into the picture. A comprehensive plan offers an all-round coverage for damages to your bike including protection from perils of the nature as well as man-made ones. But it is not always when a claim for insurance is made. There are policy tenures where no claims are raised. For these tenures the insurance company pays a no-claim bonus. Let’s look at what is no-claim bonus in bike insurance:

When you do not raise a claim during the entire policy tenure, the insurance company awards you’re a no-claim bonus. This bonus is a concession in your bike insurance renewal premium and a reward for safe driving and not making any claims with the insurer. Such bonus facility can be accumulated over each period to lower your insurance premium. However, you must remember that this no-claim bonus facility is available only for the own-damage portion of comprehensive policies and not third-party coverage.

Here are some of the benefits of no-claim bonus in bike insurance:

Acts as a reward:Since the bonus facility helps to lower the incidence of premiums, it acts as a reward for safe riding. This concession discourages from making small claims in return which the insurer lowers the renewal premium.

Transferability: Another benefit of the no-claim bonus is that it is transferable. Since the bike insurance policy belongs to the policyholder, i.e. you, and not your vehicle, it is transferable even when you change your vehicle. This way, even when a bike is replaced with a new one, the same policy benefits can be carried forward thereby getting best insurance deals for your new bike.

Lower the incidence of premium: The primary benefit of the no-claim bonus is that it lowers the cost of premium. This way, you can avail concession when you ride safely and not make claims for repairs.

How much does the no-claim bonus benefit?

As discussed above, this no claim bonus in bike insurance helps reduce the impact of premium on your wallet. But how much is the question. This benefit starts at 20% and goes all the way up to 50% for consecutive claim-free policy tenures. The table below elaborates on how the bonus is accrued –

Consecutive claim-free policy years NCB concession
At the end of year 1 20%
At the end of year 2 25%
At the end of year 3 35%
At the end of year 4 45%
At the end of year 5 50%

Terms and conditions apply. Will changes as per IRDAI rules and regulations.

With the above benefits of no-claim bonus explained, take advantage of this policy feature in a comprehensive plan. Although remember that any claim made shall nullify the bonus accrued at the next renewal date. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.