How Does NCB Work In Multi-year Two Wheeler Insurance?

According to a leading newspaper, a whopping 47% of people who lost their lives in a road accident were riding on a two-wheeler in one year. This indicates that most of us do not take physical safety seriously let alone our financial safety. 

How Does NCB Work In Multi-year Two Wheeler Insurance? - Acko

Traffic rules are becoming stricter each year. The authorities are urging commuters to take care of themselves both physically and financially. Most of all, on-road safety has been given utmost priority. One major rule has been laid out by the authorities since September 2018 – buying long term two-wheeler insurance policies. This step will ensure that no third-party is denied financial help in case of an accident.

In this article, we will focus on what is No Claim Bonus and how it is calculated on multi-year bike insurance policies.

What is a Multi-year Bike Insurance Policy?

As the name suggests, a multi-year bike insurance policy is valid for more than one year. Buying such kind of a long-term policy has been made mandatory by the Insurance Regulatory and Authority of India (IRDAI) since 1st September 2018. Note that, buying multi-year 2 wheeler insurance is only applicable on 2 wheelers purchased after 1st September 2018. It is not mandatory to buy a multi-year policy for older bikes.

Another important aspect of this rule is, it is applicable only on the liability component of your 2 wheeler insurance. That is, the rule is applicable only on the third-party (TP) component of your policy and not on the own damage (OD) component. Thus, the owner has an option to choose from either an extensive bike insurance policy (5years TP + 5years OD). Or long-term third-party coverage and short-term own damage (5years TP + 1year OD). Or one can choose to buy only a multi-year third-party bike insurance cover (5years TP).

What is NCB?

NCB stands for No Claim Bonus. It is discount awarded to the policyholder for not raising a claim throughout the policy year. NCB is applicable only if you buy a comprehensive bike insurance policy, i.e. on the own damage component. NCB is cumulative in nature and increases with every consecutive claim-free year.

Claim-free year (Short-term policy) Percentage of NCB discount on premium

1

20

2

25

3

35

4

45

5 and beyond

50

 

Note that one can easily lose the NCB discount. This can happen in two cases – 1) when a claim is raised 2) lapsed policy. No matter the amount of discount you have accumulated over the years, it will drop to zero when a claim is raised. Also, if you do not renew your bike insurance policy within 90 days of expiry you will lose your NCB.

How is NCB Calculated for Multi-year Policies?

The NCB calculation for a multi-year policy is more rewarding as compared to a short-term bike insurance policy. Note that NCB is calculated at the time of renewal, thus the following discount is applicable at the end of policy tenure i.e. 5 years for bike insurance. Existing bike owners are also eligible to buy a multi-year insurance policy for their bikes.

Existing NCB percentage at policy purchase No claims during policy tenure 1 claim during policy tenure 2 claims during policy tenure 3 claims during policy tenure 4 claims during policy tenure 5 or more claims during the policy tenure

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

The maximum NCB is capped at 50%.

How to Buy an Ideal Insurance Policy for your Bike?

Compare policies

You can easily compare plans if you buy two wheeler insurance online. You can visit a web aggregator online portal to search plan offered by various insurance companies. Comparing two wheeler insurance online will help you buy a feature-rich plan at an economic rate.

Choose the right insurer

The right insurance company is the one that offers prompt services, has a quick turnaround time, and offers affordable yet feature-rich insurance products. You can select an insurer based upon online reviews on their social media handles or by taking a look at the claim settlement ratio from the insurance regulator’s website while buying two wheeler insurance online.

Understand coverage

To buy an ideal insurance policy for your bike, you need to understand your own needs and the coverages available in the market. Weigh your options, understand jargons like IDV or NCB. Know the types of policies available (Third-party or comprehensive). Only then you will be able to buy the best coverage for yourself.

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