When you buy a two-wheeler, getting it insured is not just a legal requirement but also a smart way to protect your vehicle. Two important terms you will come across in two-wheeler insurance are IDV (Insured Declared Value) and NCB (No-Claim Bonus). Both these terms play a key role in deciding the premium you pay and the benefits you get. Understanding what is IDV and NCB in bike insurance can help you make better decisions while buying or renewing your insurance policy.
IDV and NCB in Two-Wheeler Insurance: What’s the Difference?
Let’s take a closer look at what is IDV and NCB in two-wheeler insurance and understand how they work:
What is IDV (Insured Declared Value)?
Definition: IDV is the maximum amount your insurance provider will pay you if your two-wheeler is stolen or damaged beyond repair. Put simply, it's the bike or scooter's current market value.
How it is calculated:
- The depreciation value of the vehicle is subtracted from the selling price set by the manufacturer to determine its IDV.
- For example, if the selling price of your bike is ₹1,00,000 and the depreciation is ₹20,000, then the IDV will be ₹80,000.
Impact on Premium:
- A higher IDV means better coverage, but it also means a higher premium.
- A lower IDV reduces the premium but might not provide adequate coverage in case of a loss.
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Age of the Vehicle
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Depreciation Rate
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Less than 6 months
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5%
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6 months to 1 year
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15%
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1-2 years
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20%
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2-3 years
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30%
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3-4 years
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40%
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4-5 years
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50%
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What is NCB (No-Claim Bonus)?
Definition: Insurance companies give NCBs to customers who don't file claims during the policy period.
How it works:
- A percentage of the premium, known as NCB, is discounted at the time of renewal.
- For example, if your annual premium is ₹2,000 and you have a 20% NCB, you’ll pay only ₹1,600.
Benefits of NCB:
- It can significantly reduce the cost of your policy over time.
- NCB is transferable when you switch insurers or buy a new bike.
NCB Slabs:
- 1st claim-free year: 20%
- 2nd claim-free year: 25%
- 3rd claim-free year: 35%
- 4th claim-free year: 45%
- 5th claim-free year: 50%
Key Differences Between IDV and NCB
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Feature
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IDV
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NCB
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Meaning
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Market value of the vehicle
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Discount for no claims made
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Impact on Premium
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Higher IDV = Higher Premium
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Higher NCB = Lower Premium
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Purpose
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Compensation for total loss
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Reward for safe driving
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Transferable
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Not transferable
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Transferable to new insurance
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Conclusion
Your two-wheeler insurance policy must include details about both IDV and NCB. While IDV determines the coverage amount in case of theft or total loss, NCB helps you save money on your premium for responsible riding. Understanding these terms ensures you get the right policy at the best price. So, the next time you renew or buy two-wheeler insurance, make sure to evaluate both IDV and NCB carefully to maximise your benefits.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.