What is IDV and NCB in Two-Wheeler Insurance? Read this article and find out.
IDV in bike insurance means the insured declared value of the vehicle. It is an important factor to consider before purchasing a two-wheeler insurance plan. IDV determines the amount of reimbursement that the policyholder will receive towards repair/replacement expenses in case of total damage to the motorbike. In case of total loss due to an accident or theft, the insurer will provide fixed sum insured as compensation to the policyholder. For example, if the IDV of your motorbike is Rs. 50,000, the bike insurer will disburse a maximum amount of Rs. 50,000 in case of theft of your bike.
The value of your motorbike begins depreciating from the time of purchase. Your insurance premium is directly proportional to the IDV of your car. Thus, as your vehicle becomes older, the premium will reduce. If the IDV is low, the premium will also be low.
The IDV is calculated on the following parameters:
|Age of Vehicle||% depreciation for calculating IDV|
|Not exceeding 6 months||5%|
|Exceeding 6 months but less than 1 year||15%|
|Exceeding 1 year but less than 2 years||20%|
|Exceeding 2 years but less than 3 years||30%|
|Exceeding 3 years but less than 4 years||40%|
|Exceeding 4 years but less than 5 years||50%|
- Manufacturer, make, and model of the motorbike
- Details of motorbike registration, including the city of registration
- Date of registration of your motorbike
- Whether it is a personal motorbike or one owned by a corporation
- Cubic capacity and ex-showroom price of the motorbike
How to Calculate Insured Declared Value?
The formula to derive the actual insured declared value of your motorbike is:
Insured Declared Value = (Company’s listed price – the depreciation value) + (Cost of vehicle accessories - the depreciation value of these parts)
You can also calculate the insured declared value of your motorbike using an online IDV calculator. It is simple, easy to understand and completely free to use.
A Few Points to Consider before Calculating IDV
- Always provide a correct valuation of IDV.
- IDV is the maximum compensation you will receive in case of total loss or theft of your motorbike.
- The right declaration value will smoothen the claims process.
- Assess the premium cost and check if it has been carefully evaluated on the basis of your bike’s IDV.
- Ensure that the cost of premium is determined on the basis of IDV.
No-Claim Bonus (NCB)
No-Claim Bonus is a discount in premium offered by insurance providers to policyholders who have not made a single claim during the term of the two wheeler insurance policy. It is applicable during the time of renewal. A No-Claim Bonus can also be transferred from the older to the newer motorbike. Also, an NCB can be transferred to another insurance company as well.
The discount in premium is usually 20% for the second year, 25% for the third year, 35% for the fourth year, 45% for the fifth year and 50% for the sixth year. An NCB can only be carried forward provided the policy is renewed within 90 days of the expiry date of the previous policy.