How No Claim Bonus is Calculated in Bike Insurance?

Insurance is almost as synonymous with the idea of security. You want to secure your family after you are gone? There’s life insurance. You want to make sure you can afford medical care? There’s health insurance. Similarly, if you want to protect your bike from accidental damages and theft, you can get bike insurance. However, this is taken in the wrong sense by many individuals. The misconception is that insurance is simply a safety net that is only beneficial at the time of an accident.

Insurance policies, especially a bike insurance plan not only secures you financially in the case of an unfortunate event, but it also offers you a lot of other benefits. One of which is a no claim bonus.

What is No Claim Bonus?

A no claim bonus is essentially an insurance company’s way of rewarding its customers. This reward is given for being a profitable customer. In the case of bike insurance, this reward is given for not making a claim over a long period of time. The basic concept is that each year you go without making a claim on your bike insurance, the insurer awards you with a certain percentage of no claim bonus. However, a no claim bonus can only be earned through an add-on.

While it is also a provision in other types of insurance policies, it affects a bike insurance policy very differently. For the benefit it offers, a no claim bonus is often one of the deciding factors at the time of buying a bike insurance policy. A no claim bonus cover makes your insurance deal even sweeter with time.

How is no claim bonus calculated?

The exact amount that comes under no claim bonus for you is decided by the insurance provider. A no claim bonus is often offered as a discount in your premium. This discount is based on a percentage that is set by the insurance provider. This percentage of your premium is then deducted from your total premium to give you a final reduced premium for the same amount of coverage.

While there can differences between different insurance providers, the usual range of the no claim bonus starts from 20% and goes up to 50%. This means that you initial no claim bonus can be between can be around 20% of your total premium.

The no claim bonus you receive will grow with time. Essentially, the more time you go without making a claim. Since, a bike insurance policy is renewed annually, your no claim bonus percentage also updates at that time. This means each year you spend without making a claim, you are rewarded a no claim bonus. This in turn means that the premium for the same amount of coverage gets lesser each year.

If you buy a bike insurance policy with a no claim bonus cover, the no claim bonus you will get after going one complete year without a claim is around 20%. For the next year gone without making a claim, you get around 25% no claim bonus. This percentage keeps growing until it reaches the top limit of no claim bonus percentage for your insurance provider. Usually, most insurance providers have an upper limit on no claim bonus of 50% of the total premium.

On the other hand, if you end up in an accident and you do make a bike insurance claim, you will lose you no claim bonus benefit. The only way you can regain this benefit is by purchasing the cover again at the time of renewal.

You should know that the no claim bonus is only accessible through an add-on cover. Since, add-on covers can only be bought with a comprehensive bike insurance policy, no claim bonus does not apply to a third-party plan. A third-party plan is the minimum mandatory protection you need to drive a bike on the road. However, the coverage is only focused covering liabilities. Hence, it is better to buy a comprehensive plan to enjoy an NCB benefit.

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