Deep Dive Into IDV & NCB of Two-Wheeler Insurance

Covering your bike (or two-wheeler) under a good bike two-wheeler insurance is an absolute necessity. The biker should always comply with the rules mentioned in the Motor Vehicles Act, 1988. As per changes in the act, third-party two-wheeler insurance is mandated by the Government.

It is a known fact that vehicles (i.e. bikes, cars, etc.) are depreciating assets and the asset value starts depreciating from the time the vehicle is delivered to the customer. Many two-wheeler insurance buyers opt for vehicle insurance without going through the details of the policy. In that process, they tend to invest in an insurance policy that might not be aligned with their vehicle’s needs. This not only applies to first-time two-wheeler insurance buyers but also to owners who are well-versed with the nitty-gritty of vehicle insurance.

In this blog, we demystify two important terms - IDV (Insured Declared Value) and NCB (No Claim Bonus) that every bike owner should know.

Insured Declared Value (or IDV) is the maximum insured amount that will be offered by the vehicle insurance company when you are filing a claim. IDV is one of the important factors since it has a direct correlation with the cost of your two-wheeler insurance premium.

The IDV amount is normally fixed by the insurance provider and it is inline with the vehicle’s market value in most cases. The important factor to note about IDV is that its value might change during the insurance renewal process since the vehicle is no longer new (i.e. its value has depreciated over time) and its current market value might be a lot less in comparison to the preceding year.

It is always recommended to keep a watch on your bike’s current market value so that you know that the IDV being offered is inline with the current market trend.

No Claim Bonus (NCB) is the important term that you should be aware of, irrespective of whether you are buying two-wheeler insurance or car insurance. Normally, insurance providers like to reward riders that follow driving regulations since their driving discipline is normally evident from the claims that are filed by them in a particular year.

NCB is the sum that is accumulated on a year-on-year basis. Two-wheeler insurance providers, including Royal Sundaram General Insurance, offer benefits of NCB from the second year of opting for the two-wheeler insurance.

NCB accumulates over the years and the concession largely depends on the number of claim-free years that you have earned. The bonus is offered in the form of concession on the bike premium paid by you. It is important to note that NCB is the same across companies.

As far as IDV is concerned, it is completely dependent on the age till 5 years, thereafter IDV is based on the condition of the two-wheeler. If you are not maintaining your bike properly, chances are that its IDV might be a lot less even if the bike is relatively new! IDV is one of the important factors that should be considered when renewing a two-wheeler insurance policy. Here is how IDV is calculated:

IDV = (Listed selling price of the company – bike’s depreciation value) + (cost of bike accessories that are not included in the listed selling price – depreciation value of the bike’s accessories)

A two-wheeler or bike insurance premium calculator can help in calculating the accurate IDV of your two-wheeler. To conclude, NCB and IDV are two vital factors that help in deciding the insurance premium of your two-wheeler.