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.
| Age of the Vehicle |
Depreciation Rate |
| Less than 6 months |
5% |
| 6 months to 1 year |
15% |
| 1-2 years |
20% |
| 2-3 years |
30% |
| 3-4 years |
40% |
| 4-5 years |
50% |
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
| Feature |
IDV (Insured Declared Value) |
NCB (No Claim Bonus) |
| Meaning |
Market value of the vehicle |
Discount for no claims made |
| Impact on Premium |
Higher IDV = Higher Premium |
Higher NCB = Lower Premium |
| Purpose |
Compensation for total loss |
Reward for safe driving |
| Transferable |
Not transferable |
Transferable to new insurance |