How to calculate No claim Bonus in Bike Insurance?

Amrit Pal Singh 11-09-2023 Bike Insurance, Standalone OD Policy Bike Insurance, Two Wheeler Insurance, Types of Bike Insurance

Calculating the No Claim Bonus (NCB) in bike insurance is crucial for both the insurance provider and the policyholder. It rewards policyholders for not making claims during the policy term by reducing the premium amount for subsequent years.

To calculate the No Claim Bonus (NCB) in bike insurance, you need to follow these steps:

Understand the NCB structure: NCB is a reward given by insurance providers for not making any claims during the policy year. It is a discount on the premium amount, and it increases with each claim-free year.
Check the NCB slab rates: Different insurance providers offer different NCB slab rates. Typically, the NCB starts at 20% and goes up to a maximum of 50% after 5 consecutive claim-free years. Check your insurance provider's NCB slab rates to know the exact percentage of discount you are eligible for.
Determine your eligibility: To be eligible for NCB, you should not have made any claims during the policy year. Even a single claim can reset your NCB to zero. However, some insurance providers offer an add-on called NCB protector, which allows you to retain a certain percentage of NCB even after making a claim.
Calculate the NCB discount: Once you know the NCB slab rates and your eligibility, you can calculate the NCB discount using the following formula: NCB discount = Own Damage Premium * NCB percentage

For example, if your Own Damage Premium is Rs. 10,000 and your NCB percentage is 30%, then the NCB discount will be Rs. 10,000 * 0.3 = Rs. 3,000.
Apply the NCB discount: Finally, deduct the NCB discount from your Own Damage Premium to arrive at the final premium amount. In this example, the final premium amount will be Rs. 10,000 - Rs. 3,000 = Rs. 7,000.

It's worth noting that NCB may not be transferable between different types of insurance policies or between different insurance providers. Therefore, if you are switching insurance providers or buying a new policy, check with them to understand how they calculate NCB and whether your existing NCB can be transferred.