There is a pre-consumed notion regarding insurance-related terminologies that they are difficult to comprehend. Even if insurance concepts are not easy or simplified, they can be understood with a little effort.
Two such concepts are insured declared value (IDV) and no-claim bonus (NCB) in insurance. If you have or are planning to buy two-wheeler insurance, you must understand these terms to make better decisions in favour of your policy and financial well-being.
This blog explains what IDV and NCB are and how significant they are for your bike insurance policy.
Understanding Insured Declared Value (IDV) in Bike Insurance
IDV means in bike insurance, the maximum sum assured by the insurer, which is determined at the time of policy purchase. Suppose you lose your bike to theft or other total loss. The amount of compensation that the insurance company will provide is called IDV in bike insurance.
IDV is a significant determinant that must influence your decision to buy a particular insurance for a 2-wheeler or move to the next.
List of Factors Determining IDV in Bike Insurance
- Age of the bike
- Manufacturer’s selling price
- Depreciation
- Add-on and safety accessories
- The market value of the bike
- Fuel tank type
- Make and model of the bike
- Bike insurance policy period
Setting IDV in Bike Insurance
If you want to calculate the ideal IDV for your bike insurance policy, you can utilise an online tool called IDV calculator. You have to input all the necessary details about your bike, claim history and driving history, and the tool will calculate the IDV amount for you.
IDV Formula:
IDV = MRP of the two-wheeler – Depreciation over time of the bike
OR
IDV (for a bike with safety and stylish accessories) = (MRP – Depreciation over time) + (Market price of accessories – a depreciation of the accessories over time)
Note that the depreciation of the bike increases in percentage as the bike gets old.
Understanding No-Claim Bonus (NCB) in Bike Insurance
NCB means in bike insurance, a discount or bonus offered by insurance providers. It is a reward offered to the policyholders for not making a claim during the policy term. Suppose you go claim-free for one policy term. When you go to renew your policy, your premium will be discounted.
One can achieve this feat by not raising a claim for small repairs and maintenance visits. If you manage to go claim-free for consecutive years, you can accumulate your NCB, earning an increased rate of deserved premium discounts. It is advised to avoid any small claims so that you can accumulate your NCB and enjoy increasing discounts on your premium amounts.
Significance of NCB in Bike Insurance
● Cost-Saving
As mentioned above, you can save a lot of money through discounts on your premiums if you earn and accumulate your NCB. The discount will range from 20% to 50% if you successfully avoid claiming any compensation for consecutive years. If and when you renew your bike insurance policy in time, your NCB in bike insurance can be claimed.
● Motivates Safe-Driving
Rash driving and breaking the rules and regulations while driving cause a lot of trouble. These mistakes are major reasons why policyholders raise a claim. With NCB, policyholders are motivated to drive safely and avoid unnecessary claims.
● Bonus Accumulation
One of the most important advantages of NCB in bike insurance is that you can accumulate your bonus. What this means is that if you successfully go claim-free for consecutive years, your premium discounts will increase in percentage every policy term. This results in increased profitability of the bike insurance policy.
● Easy Transfer
NCB can be transferred to a new bike if it comes under the same class.
Things to Know About NCB in Bike Insurance
- If the policyholder raises a claim after a few terms, the NCB balance will be nil.
- NCB can only be claimed if you renew your policy in time.
- You can recover your NCB even if a name is transferred to your registration certificate.
- If you miss the bike insurance policy renewal date, you can still renew your policy within 90 days of the expiry date and claim your NCB.
- Once your policy lapses, you lose all the accumulated NCB on your bike insurance policy.
- After you sell your vehicle, you can buy a new vehicle and replace the vehicle under the policy within three years to utilise your NCB on your old bike insurance policy.
Conclusive Note
We have said it before, and we are saying it now: IDV and NCB in bike insurance are concepts that you must understand in order to make good decisions throughout your insurance policy period.
Fair compensation against premium, safe driving habits and discounted premium amounts are a few benefits you will experience with the correct use of these features. Additionally, leading insurers like Tata AIG offer add-ons or policy riders, which can help you protect your NCB and get the invoice value of your bike at the time of claim filing.
