IDV and NCB in Two-Wheeler Insurance: Key Differences

Posted on: Dec 20, 2024 | 3 mins | Written by: HDFC ERGO Team

IDV and NCB in Two-Wheeler Insurance: Key Differences

When you opt for two-wheeler insurance, there are several terms and conditions that you need to be familiar with. Two of the most important aspects of your policy are IDV (Insured Declared Value) and NCB (No Claim Bonus). Both play a crucial role in determining your coverage and premium, but they differ significantly in what they represent and how they affect your policy.

IDV and NCB in Two-Wheeler Insurance: What’s the Difference?

Let’s first understand what is IDV and NCB in two-wheeler insurance.

IDV

IDV, or Insured Declared Value, is the maximum sum your insurance company will pay you if your two-wheeler is damaged beyond repair or stolen. It is essentially your bike's current market value, considering its make, model, age, and condition. The IDV also considers the vehicle's depreciation over time. It is decided when purchasing or renewing the policy.

For example, if your bike with an IDV of ₹80,000 gets damaged beyond repair in an accident, the insurer will pay up to ₹80,000, reducing any deductible or excess. The value is typically recalculated each year, reflecting the vehicle's depreciation.

NCB

NCB, or No Claim Bonus, is a reward the insurer gives to the policyholder for not making any claims during the previous policy year. This is essentially a discount on your premium when you renew your policy, as the insurance company views you as a safer rider who hasn’t caused any accidents. The NCB can range from 20% to 50%, depending on the number of claim-free years. This discount helps to reduce your renewal premium, making your policy more affordable. However, if you file a claim, your NCB will be reset to zero, and you will not be eligible for any reductions on your next renewal.

Key Differences Between IDV and NCB

While both IDV and NCB affect the overall value of your two-wheeler insurance policy, they do so in different ways.

Criteria	IDV	NCB
Purpose	Determines the maximum payout from the insurer in case of a total loss or theft of the vehicle.	Offers a discount on your policy premium for not making any claims during the policy term.
Impact on Policy	A higher IDV leads to a higher premium but ensures better coverage in case of theft or irreparable damage.	NCB results in a lower premium when renewing the policy, which can help save on the cost of insurance over the years.
Calculation	Calculated based on the market value of your bike, considering its age and depreciation.	Calculated as a percentage of the premium based on your claims history.

Conclusion

In two-wheeler insurance, both IDV and NCB play significant roles in determining your coverage and premium. While the former ensures that your bike is adequately covered in case of total loss or theft, the latter rewards you for safe riding with discounts on your renewal premium. You must understand that NCB and IDV apply only for comprehensive insurance, not third-party bike insurance.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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