Know About IDV and NCB in Two Wheeler Insurance
Know About IDV and NCB in Two Wheeler Insurance
There are a few essential terms that are important to know about two-wheeler insurance. Knowing technical jargon will make your insurance purchase easier. Moreover, you can even benefit from it by availing the policy in a more efficient manner. IDV and NCB are two important insurance terms.
Table of Contents
What is Insured Declared Value (IDV)?
It is the market value of a two-wheeler vehicle that is called the Insured Declared Value (IDV). The maximum amount an insurer will pay a policyholder if their two-wheeler is stolen or completely destroyed. A policyholder is entitled to receive a reimbursement of repair or replacement costs if his or her two-wheeler is totally damaged.
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 |
Depreciation Rate |
|
Less than 6 months |
5% |
|
More than 6 months but less than 1 year |
15% |
|
More than 1 year but less than 2 years |
20% |
|
More than 2 years but less than 3 year |
30% |
|
More than 3 years but less than 4 year |
40% |
|
More than 4 years but less than 5 year |
50% |
What Should Be the IDV of a Two-Wheeler?
During the purchase of a two-wheeler insurance policy, every policyholder needs to select an Insured Declared Value (IDV) of their bike or scooter offered by the insurance company. It is crucial to declare the value correctly as it will have a direct impact on the premium of the policy as well as the compensation amount which you can receive in the condition of any damage or theft, or a constructive total loss suffered by the insured two-wheeler vehicle.
If a lower IDV is chosen which is lower than that of your two-wheeler’s present market value, in such a case, the insurance provider will provide you the policy with a lower two-wheeler insurance premium, whereas, in case of filing a theft claim or a constructive total loss claim, the amount of compensation will also be quite less that could bring significant loss for you. On the other hand, if the declared IDV is higher than the current market value of your bike, then you might get eligible to get higher compensation, but the insurance company will charge you with a higher premium amount. Hence, it is vital to opt for an optimum IDV which should be economical and beneficial.
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 |
20% |
|
Two continuous claim free years |
25% |
|
Three continuous claim free years |
35% |
|
Four continuous claim free years |
45% |
|
Five continuous claim free years |
50% |
Can NCB Be Transferred to Another Vehicle?
The insurance companies offer the No Claims Bonus to the insured person and not the insured vehicle. The NCB is provided for every claim free year which could be possible only with sensible and responsible driving that is possible only due to the driver. Therefore, it is transferable from your old two-wheeler vehicle to new two-wheeler vehicle, if you remain the policyholder and plan to purchase a new bike or scooter. In simple terms, your careful driving skills can make you earn a discount on insurance policy premium for different two-wheeler vehicles with the No-Claim Bonus, which is quite beneficial and the best way to save on the premium due for a two-wheeler insurance plan.
Take Away
The above explanation gives you an understanding of IDV and NCB as well as their significance in two-wheeler insurance. During future claim submissions, you should consider the IDV value and make sure you make the right decisions to sustain and gain NCB benefit without any hassle.
Also Read:
Difference Between Comprehensive and Zero Depreciation Bike Insurance Policy
All You Need To Know About No Claim Bonus in Two Wheeler Insurance
"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."
