What is IDV in Bike Insurance? How IDV and NCB Together Decide Your Premium

Several factors influence the premium for a bike insurance policy. Two such important factors are the No Claim Bonus (NCB) and Insured Declared Value (IDV). While IDV means the insured value of a bike, NCB rewards claim-free years with a premium discount.

Knowing how these factors work together will help you to understand why the premiums vary across different insurance policies. Continue reading to learn how IDV and NCB together influence your bike insurance premium.

Understanding IDV in Bike Insurance

What is IDV?

The IDV in bike insurance is the maximum amount the insurer agrees to pay in case your bike is stolen or damaged in an accident. This is the current market value for your bike after depreciation deductions. The older your bike, the higher your depreciation percentage will be. Choosing the best IDV for your bike insurance ensures you are neither underinsured nor overpaid for your policy.

How is IDV Calculated?

The IDV for your two-wheeler is calculated as:

IDV = MRP of bike – Depreciation Value

Consider an example. Suppose the MRP of your bike is ₹50,000 and the depreciation percentage after 2 years is 20%. Therefore, the IDV is:

IDV = ₹50,000 – 20% of ₹50,000 = ₹40,000

Understanding No Claim Bonus (NCB) in Two-Wheeler Insurance

No Claim Bonus (NCB) is the accumulated discount based on the number of claim-free years during the policy tenure. As an insured individual, if you have a good driving record, you can earn up to a 50% no-claim discount, considering the number of claim-free years.

No claim discount is applicable only on the ‘Own Damage Premium’ of a 2-wheeler policy. The discount usually ranges between 20% and 50%.

How is NCB Determined?

Upon first renewal of your comprehensive bike insurance policy, the NCB of your bike starts. After the first claim-free year, a savings of 20% is allocated during renewal of two wheeler insurance. Now, after each consecutive claim-free year, the NCB discount percentage increases by 5-10% during renewals.

Here is the table outlining the NCB in two-wheeler insurance depending on the number of claim-free years:

How IDV and NCB Together Influence Your Bike Insurance Premium?

The Insured Declared Value (IDV) and No Claim Bonus (NCB) play a crucial role towards determining your bike insurance premiums. Understand how both work to make a well-informed business decision.

Higher IDV Can Increase the Premium

Bikes with a high IDV are insured for higher value. This raises the compensation available in case of total loss or theft. But the insurance premium in this case will also rise, as the insurer undertakes a higher financial risk.

NCB Helps Reduce Your Premium

The No Claim Bonus is a reward for not filing a claim during the policy period. It provides a discount for the own damage premium during renewal. The NCB discount grows with an increase in claim-free years, leading to reduced insurance costs.

Finding the Right Balance

Selecting an appropriate IDV and retaining your NCB helps you find the right balance and affordability. It provides sufficient coverage for your bike while keeping your insurance cost affordable.

While comparing the available options, policyholders can choose bike insurance based on the NCB benefits, applicable IDV, coverage and terms of policy.

Conclusion

To protect both your bike and finances, choose the right bike insurance policy. The right policy, IDV and add-ons can minimise unforeseen expenses and provide peace of mind. It also ensures comprehensive coverage in case of an accident, theft or other events.

You can customise this policy by including add-ons, to meet your requirements. With trusted insurers like TATA AIG, it also ensures easy access to a vast network of cashless garages, 24/7 claim assistance and a convenient online purchase and renewal procedure.