IDV & NCB for comprehensive two wheeler insurance
Two terms related to comprehensive two wheeler insurance that leave many new bike owners confused are IDV and NCB. Let us look at each of them in detail.
Insured Declared Value, or IDV in bike insurance, is the maximum amount that the insurer would pay in case of a claim. This amount is payable only in the case of a total loss or an unrecoverable theft. Simply put, Insured Declared Value is the current market value of your bike.
The value of your two wheeler starts depreciating from the moment you buy it. For example, if the price at which your bike was listed at the time of purchase was ₹1 lakh, the IDV based on the current schedule from the IRDAI would be 5% less at any point in time in the first 6 months. That is to say, if your bike is in an accident that results in a total loss on the very first day the coverage started, the amount that you can claim would be ₹95,000 only and not ₹1 lakh for which you purchased it.
For purpose of depreciation, the life of a two wheeler is assumed to be five years. Therefore, the total price of the bike is depreciated over 5 years. Typically, the depreciation is lowest when the bike is new and increases with every passing year.
No Claim Bonus or NCB in bike insurance is a way for the insurer to reward your good driving behaviour. It is a discount that you can avail on your comprehensive two wheeler insurance policy premium if you have filed no claims in the preceding policy period. This discount is available only on comprehensive two-wheeler policies and not on third-party bike insurance policies.
You can avail this discount only if there is no break in the policy at the time of renewal. If you choose to switch insurers at the time of renewal, the new insurer will have to honour the NCB accumulated with the previous insurer as well.
The discount offered as NCB rises with each claim-free year. It is at 20% after the first year, 25% after the second, 35%, 45% and 50% for the next 3 years, respectively. The NCB is capped at 50% of the applicable two wheeler insurance premium.
Further, if you buy a new bike after three years of claim-free insurance coverage for your existing bike, you would be eligible for the accumulated NCB on the coverage for the new bike as well. If you sell your bike to someone else, the NCB would stay with you as it is not accrued to your vehicle. This also means that NCB cannot be transferred to another person.