When buying an insurance policy for your bike, it is important to understand the basic terminologies that come with it. The most important ones are NCB and IDV – since they have a direct impact on your bike insurance premium rates.
Therefore, to save on your bike insurance premium, let us understand NCB and IDV to help you get the best bike insurance policy.
What is IDV In Bike Insurance?
The Insured Declared Value (IDV) is the optimum amount that the insurance company promises to pay in case the insured bike faces a total loss under own damage cover in bike insurance or a comprehensive plan.
For calculating IDV, the current value of the bike when purchasing the insurance policy is taken into consideration. Also, it is important to note that a bike is a depreciating asset. This means the IDV for your bike will go down each year by a certain percentage.
How is IDV Calculated?
When someone purchases bike insurance, the provider calculates IDV to calculate the premium payable by the insured. Various factors affect IDV calculation, such as the age of the bike, its model and make, the city and registration, etc.
The older the bike, the lower the IDV, resulting in lower premiums. Some providers offer an IDV value calculator for bikes, but the general formula used to calculate the IDV for bike insurance is:
- Calculate the current price of the bike.
Current Price = Selling price of the bike – depreciation rate (depending upon a total number of years)
Note – Any additional accessories added to a vehicle, like custom parts, extra fittings, or enhancements, are considered while also subtracting depreciation of those parts as well.
Depreciation Table for IDV value calculation for bike-
| Age of the Bike | Depreciation |
| Less than six months | 5% |
| More than six months to a year | 15% |
| More than one year to a two-year | 20% |
| More than two years to three year | 30% |
| More than three years to a four-year | 40% |
| More than four years to a five-year | 50% |
Why is IDV Important for Two-Wheeler Insurance?
When you purchase bike insurance, you need to declare your bike insurance IDV to your bike insurance provider. So, based on your declared IDV, the insurance provider will calculate the premium amount you need to pay, which will impact the compensation you will receive.
Therefore, choosing the right insurance impacts your premium cost and the compensation you receive in case of an accident. If you select a lower IDV, though the premium amount would be less, the compensation you receive will also be low.
Therefore, if your bike was stolen and you noted less IDV, then you might face a significant loss in compensation receivable. The same goes for calculating higher IDV. You will get higher compensation, but you also have to pay a higher premium.
Overall, the best IDV for bike insurance is one that is neither too high nor too low.
What is NCB in Bike Insurance?
A no-claim bonus is a discount given by the insurance provider to the insured as a reward for not claiming insurance during the year. The no-claim bonus discount can be claimed by the insured during the time of bike insurance renewal as an incentive for responsible driving.
The no-claim bonus is offered as a percentage discount at the time of renewal. This percentage is received for each claim-free year and accumulates annually. Therefore, if the person has not claimed insurance, let’s say, for 2 or 3 years, then he is eligible for a higher discount.
The no-claim bonus can range anywhere between 20%-50% depending on your insurance provider, and for years you have not filed a claim. If the insured files the claims in a particular year, then he loses his no-claim bonus.
In these cases, a No claim bonus protection cover is a great way to save your no-claim bonus. Many online insurers like Tata AIG offer this add-on under their comprehensive bike insurance plans.
Importance of Bike Insurance No Claim Bonus
- Great Save on Policy Renewal
A no-claim bonus is a great way to save on policy renewal. You can get a discount of up to 50% for five consecutive claim-free years.
2. Transferable
Even if you decide to change your provider, you still can claim the no-claim discount with your next bike insurance provider.
3. Sign of Credibility
A no-claim bonus shows how good your driving skills are, like a track record, which is a sign that you are a responsible driver. This can significantly help you receive more discounts on your premium rates.
Can Bike Insurance NCB be Transferred to Another Bike?
It can be ported to another insurance policy. The interesting thing about NCB is that it is offered to a person and not to a bike. It is a reward given for no claims and responsible driving skills. Therefore, you can easily transfer it from your old bike to your new bike or from your old insurance provider to your new insurance provider.
Conclusion
IDV and NCB are two extremely important terms that massively affect your two-wheeler insurance premiums. IDV helps calculate your premium and directly impacts the decision about your coverage received at the time of the accident.
NCB helps you save a significant amount at the time of renewal. When buying bike insurance, it is crucial to understand both these terms to make informed decisions about your coverage and potential savings.