What is IDV in Bike Insurance?
2024-10-19 11:45:10When you buy bike insurance, you might come across the term "IDV". But what is IDV and why does it matter on your motorcycle insurance?
Insured Declared Value (IDV) is essentially the current market rate of your bike. It's important because it helps determine how much money you’ll receive from your insurer if your bike gets stolen or completely damaged in an accident. Knowing IDV will help you in selecting the right insurance policy for your bike. So in this blog, let's learn more about IDV in bike insurance, how to calculate it, and more for your better understanding.
What is IDV value in bike insurance?
Insured Declared Value (IDV), is the maximum sum for which your two-wheeler can be insured. This is the amount of insured payable in case of a total loss of the two-wheeler or irrecoverable theft. In other words, Insured Declared Value means how much your bike is worth in today's market.
Keep in mind that the minute you purchase a two-wheeler, it begins to depreciate in value. If the bike was bought at a listed price of ?2 lakh, then the IDV would be 5% less than that for the first 6 months that you own the bike. If on the first day you insure your bike and it gets stolen then the most you can claim is ?1,95,000, not the entire ?2 lakh.
How to Calculate the IDV Value of a Bike?
The IDV of the bike is based on the declared selling price by the manufacturer. It is determined when the policy starts or during a renewal of the policy and then depreciates accordingly.
You can easily find out how much your bike is worth on the market and how much you should be paying for insurance with the use of an IDV calculator. If you wish to have non-factory fitted accessories covered, the IDV is determined separately by your insurer for an additional charge. Make sure you inform your bike insurer on time.
1. IDV for Bike Without Accessories
IDV = MRP of the bike - Depreciation Value
*MRP of the bike refers to the listed ex-showroom price by the manufacturer
*Depreciation as per the industry standard.
Rate of Depreciation on Bike
| Age of the vehicle | Percentage of Depreciation Given by IRDAI |
|---|---|
| Not more than 6 months | 5% |
| More than 6 months but less than 1 year | 15% |
| More than 1 months but less than 2 year | 20% |
| More than 2 months but less than 3 year | 30% |
| More than 3 months but less than 4 year | 40% |
| More than 4 months but less than 5 year | 50% |
IDV Value for Two Wheeler: Five Years and Above
If your bike is older than five years, or from a model that has been discontinued, the insured declared value is determined through a mutual agreement between the insurer and you. If you have had uninterrupted coverage for the past 5 years, then the insurance company can not refuse to renew your two-wheeler insurance policy. However, many of the add-on covers will not be renewable after five years. This includes zero depreciation cover, the engine and gearbox cover, the return to invoice cover, and more.
Factors that Affect the Insured Declared Value of Your Bike
Here are some important factors on which the IDV is based:
- The age of the bike
- City of Registration
- Make, model, and variant
- Bike registration date
- Fuel type
- Bike insurance policy tenure
What if You Choose the Wrong IDV?
The IDV of your bike directly affects how much you pay for your bike insurance. If you're thinking about lowering the IDV, here’s what could happen:
- The amount you’re insured for will go down, which means if your bike is totally damaged or stolen, the claim amount will be lower.
- If repairing your bike after an accident is expensive, you’ll have to pay more from your own pocket.
- In the end, you could face a big loss because of the smaller claim amount. On the other hand, if you increase the IDV, here are the downsides: Your bike insurance premium will be higher. In some cases, raising the IDV too much might stop you from making a claim for a total loss.
That's why it's important to declare the correct IDV for your bike. You can do this by carefully researching and comparing policies before buying bike insurance.
To Sum Up
In summary, Insured Declared Value (IDV) plays a key role in determining the value of your bike insurance. It is the current market value of your bike, and it directly affects the premium you pay as well as the claim amount you can receive in case of theft or total loss. You can also calculate the IDV of your bike online and compare different plans in one place at Square Insurance.
What is IDV in bike insurance?
IDV means Insured Declared Value, in other words, the current market value of your bike that the insurance company uses to determine how much your claim will be if your bike is totalled or stolen.
How does IDV affect my bike insurance premium?
If the IDV is higher your insurance premium is high and if it is lower then your insurance premium is low but in case your bike is stolen or damaged completely you will get a smaller claim amount.
Can I choose my own IDV for my bike?
Yes, but it should be according to what the real market value of your bike is. Setting it too high or too low can lead to issues when making a claim or paying your premium.
What happens if I declare the wrong IDV?
If your IDV is too low, you may not get enough money to cover your bike’s loss. If it’s too high, your insurance premium will be unnecessarily high.
How is the IDV calculated for bikes older than 5 years?
For bikes older than five years, the IDV is determined through a mutual agreement between you and your insurer, often considering the condition and market value of the bike.
