Know About IDV and NCB in Two Wheeler Insurance
When it comes to two-wheeler insurance, there are some crucial terms which you should understand. The understanding of technical jargons can improve your insurance purchase experience. Also, it can even help you avail the policy in a much better manner. Two such important insurance terms are Insured Declared Value (IDV) and No Claim Bonus (NCB).
What is Insured Declared Value (IDV)?
The Insured Declared Value (IDV) is the market value of a two-wheeler vehicle. It is the maximum sum insured amount that an insurance provider promises to offer to a policyholder in case of theft or total loss of a two-wheeler. Basically, the IDV determines the amount of reimbursement that a policyholder is entitled to receive as repair or replacement cost in case of total damage of the two-wheeler.
Like all tangible things, the value of two-wheeled vehicles also depreciates over time. The premium of an insurance policy is directly proportional to the bike's IDV. Therefore, as your bike becomes older, the IDV reduces, which will lessen the premium amount as well. The IDV can be calculator with the formula given below:
Insured Declared Value = (Company’s listed selling price – depreciation value) + (Cost of bike’s accessories excluded from the listed selling price – depreciation value of accessories).
Age of the Two-Wheeler
Less than 6 months
More than 6 months but less than 1 year
More than 1 year but less than 2 years
More than 2 years but less than 3 year
More than 3 years but less than 4 year
More than 4 years but less than 5 year
What is No Claim Bonus (NCB)?
No-Claim Bonus is a reward given in terms of discount on the premium amount. The insurance providers provide this bonus to its policyholders, who have not requested a single claim during the financial year of the two-wheeler insurance plan. The NCB can be availed only at the time of two wheeler renewal.
This benefit plays a very significant role in lowering down the premium amount of the bike insurance policy. The discount offered under NCB starts from 20% and goes up to 50%. The No Claim Bonus (NCB) can be carried forward only if the bike insurance plan is duly renewed within 90 days of the expiry date of the previous plan.
In simple terms, it can be understood as a bonus to appreciate smooth and responsible bike riding and keeping it safer with excellent maintenance. Many people refrain themselves from filing a claim and decide to bear minor bike repair expenses. It makes them stay entitled to avail the NCB during the renewal of the bike insurance plan. It is the best way to not lose a big benefit for a small profit. The table below is explaining the implementation of No Claim Bonus (NCB) :
Claim Free Years
No Claim Bonus
No claim in the first year
Two continuous claim free years
Three continuous claim free years
Four continuous claim free years
Five continuous claim free years
With the above description, you must be able to understand the IDV and NCB terms with their significance in the two-wheeler insurance. In future, you should consider the IDV value while making the claims and must make right decisions to sustain and avail NCB benefit without any hassle.
"Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard."