As we all know, bike insurance is mandatory by law in India. The cover provided by a standard insurance policy is valid for one year from the purchase date. It is crucial to renew the policy before expiry for ensuring continuity in cover. The rapid transformation in technology in the past few years means that one can expect an easy and smooth process of renewing the policy online and through offline channels.
While there are many options to save on your premium payment during renewal, in this article, we will explore the most feasible options that can help you avoid small claims and pay a lower premium amount on your bike insurance policy.
No Claim Bonus (NCB)
While renewing a two wheeler insurance policy, the insurer will offer a No Claim Bonus (NCB) if you have not raised any claim during the policy period. The value of the bonus can go up to 50%. However, submitting small or insignificant claims will negate the possibility of the NCB during policy renewal.* Terms & Conditions apply.
Before directly jumping to minor claims, let’s first understand the No Claim Bonus and its significance.
Understanding the No Claim Bonus
Bike insurance companies provide concessions on insurance premiums via various methods. One of them is the No Claim Bonus. It is a significant concession on your two-wheeler insurance premium. The concession increases with each claim-free policy year.
NCB is a reward offered by your car insurance provider for not making any claims in the preceding year. Its value can range anywhere from 20 to 50 per cent of the payable premium. If you're purchasing your car insurance for the first time, NCB won't be applicable due to the absence of previous records. Please visit the official website of IRDAI for further details.
Why understanding the No Claim Bonus is Important
When you purchase a bike insurance policy, you get to see an impressive list of inclusions. They incorporate accidental damages (natural or man-made), cover for theft of the insured bike, and other damages. You may have also purchased a zero depreciation add-on that would help you tackle depreciated costs of your vehicle parts.
This can bring you to the conclusion that you should raise a claim for all kinds of damages without considering their magnitude. However, this is not the case.
No claim bonuses are a concession on the policyholder’s premium cost when they do not utilize their insurance for the policy. Once the claim is submitted, the concession reduces to zero, and the NCB cycle restarts. Avoiding insurance claims for minor damages like dents and scratches will help you receive a good concession via the NCB.
Assume that an individual is covered by bike insurance with an IDV (Insured Declared Value) of Rs. 2,00,000. Consider that he/she is paying premiums worth Rs. 30,000 annually. If he/she does not initiate a claim in the first year, the NCB that can be earned at the time of bike insurance renewal is 20% on the annual premium. So, for the consecutive year’s premium, the individual will have to actually pay Rs. 24,000, and not Rs. 30,000, thanks to the 20% NCB bonus on premium.* Please visit the official website of IRDAI for further details.
Now, assume that the bike has been covered for five years by a policy and no claim has been raised in these five years. But now, the individual is thinking of getting all the small dents from some minor accidents repaid (a possible value of Rs. 10,000). They raise a claim without understanding and knowing that this will reset the NCB cycle.* Please visit the official website of IRDAI for further details.
This causes them to lose a 50% concession, which would probably have been more in value (around Rs. 15,000) when compared to the repair cost of minor damages (Rs. 10,000). Therefore, it’s vital to understand the NCB cycle and the concession percentage available to a bike owner every year. You should only raise a claim for significant repair costs, theft, or cracks.
*Standard T&C Apply
Whether acquiring a two-wheeler insurance plan or renewing it is a crucial consideration; everyone desires to get a bike insurance plan that offers comprehensive coverage at an affordable rate. One of the most excellent methods to create such an arrangement is through an NCB.
A trusted general insurance company, such as Bajaj Allianz General Insurance, offers a concession in the premium at the renewal date. Again, this concession is subject to no claims during the policy tenure. Further, this NCB can also be transferred to a different insurance company in case of a change of insurer. Please visit the official website of IRDAI for further details.
So, when it comes to insurance, make the smart decision and avoid claiming for minor losses. And also, drive safely! 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.