How to Ensure No Claim Bonus on Your Insurance Renewal

Ever wonder why your bike insurance renewal premium fluctuates year after year? Several factors can significantly influence the premiums upon renewal. One such influential factor is the No-Claim Bonus (NCB).

But you may wonder what is No Claim Bonus and how does it work? You may have several other questions like this. This is where this article can help. So, read it till the end.

What is No Claim Bonus?

Insurers offer a No Claim Bonus (NCB) discount if you make no claims during the policy term. It starts at 20% and can go up to 50% by the sixth claim-free year. The discount applies only to the portion of the insurance premium that covers damages to your vehicle, not to any other parts of the premium, like third-party liability coverage.

How Does NCB in Insurance Work

The insurance premium increases the longer you go without making a claim. But how does NCB in insurance work? Well, the below table shows how. Besides bikes, No Claim Bonus in car insurance works similarly.

When is NCB Terminated or Becomes Zero?

The NCB in an insurance policy can be terminated or reset to zero in the following cases:

1. Non-renewal within 90 Days

The NCB is rewarded for not making any claims during the policy period. However, this benefit only applies if the policy is renewed within 90 days of expiration.

If you fail to renew within this grace period, the accumulated NCB is forfeited. This is due to the policy discontinuity, which breaks the chain of claim-free years.

2. Occurrence of a Single Claim

If you make a claim, the NCB resets to zero, as the claim-free record is broken. This can be costly, especially for minor claims, as the loss of the NCB may outweigh the claim benefits. So, you should consider this before making claims.

Some Points to Remember About NCB

Some of the things to remember about NCB are as follows:

1. Transferability of NCB to a Similar Class Vehicle

The No Claim Bonus is not tied to your old vehicle. If you decide to purchase a new vehicle of the same class, you can transfer the accumulated NCB to the new policy, thus benefiting from the discount on your premium.

2. Usage of NCB Post Vehicle Sale or Replacement

The NCB is preserved when you sell or replace your vehicle. You have a grace period of three years to utilise the NCB from the date of sale or replacement of the vehicle, allowing you to reduce the premium on your new vehicle’s insurance policy.

3. Non-Sharing Between Different Policies

The NCB is specific to each policy and cannot be shared or split between two policies. Each policy earns its own NCB, depending on its claim history.

4. Effect of Policy Cancellation on NCB

If you cancel your policy before the end of its tenure, the premium discount benefit accrued for that particular year will be lost. Therefore, it’s essential to maintain the policy until the end of its tenure to benefit fully from the NCB.

5. Available Only With Comprehensive Insurance Plans

You can avail of this only with a comprehensive bike insurance plan. Third-party liability plans usually don’t include NCB.

How to Transfer NCB to a New Bike or Insurer

Transferring your No Claim Bonus (NCB) to a new bike or insurer involves ensuring the continuity of your accumulated NCB benefits. You can follow the following process:

Step 1: Getting a Policy Cancellation Letter

Request a policy cancellation letter from your current insurer. This document proves that your policy is no longer active with them.

Step 2: Certificate of Insurance

Obtain a certificate of insurance from your current insurer. This document is crucial as it contains details of your insurance history, including your NCB.

Step 3: Notice of Transfer of Ownership

If you’re transferring the NCB to a new bike, you’ll need to provide a notice of transfer of ownership. This document, usually obtained from the Regional Transport Office (RTO), indicates that the bike’s ownership has been legally transferred to you.

Step 4: Application for NCB Transfer

Apply for NCB transfer to your new insurer. This application should include all the documents mentioned above.

Step 5: Verification and Approval

The new insurer will verify the documents and, if everything is in order, approve the NCB transfer.

Key Takeaways

Now that you know what is No Claim Bonus, you should leverage it effectively to save money on insurance premiums. Maintaining a claim-free record can accumulate NCB over the years, significantly reducing premium costs during policy renewal.

Therefore, it’s not just about owning a bike and getting it insured; it’s also about understanding the nuances of your policy, such as the NCB, and using them to your advantage. Remember, a well-informed bike owner is a safe rider and a smart insurance policyholder.  So, stay safe, ride responsibly, and maximise your no-claim bonus!

Additionally, explore platforms like PhonePe that offer a seamless and hassle-free experience for purchasing bike insurance.