As a bike owner, you must be aware of the importance of insurance coverage for your two-wheeler. While choosing the right insurance policy, you might have come across the term IDV or Insured Declared Value. IDV is a critical aspect of bike insurance, and understanding it is essential to maximize your coverage and get the best value for your two-wheeler. In this article, we will explain what IDV is, how it works, and how to get the best value for your bike insurance policy.
What is IDV?
Insured Declared Value (IDV) is the maximum sum assured provided by the insurance company in the event of total loss or theft of your two-wheeler. IDV is calculated based on the manufacturer’s listed selling price of the bike minus the depreciation value. Depreciation is the decrease in the value of your bike over time due to wear and tear. The IDV of your bike is determined at the time of policy purchase and is updated at the time of policy renewal based on the current market value of the bike.
Why is IDV important in Bike Insurance?
IDV is a crucial factor in bike insurance as it determines the maximum amount you can claim in case of total loss or theft of your two-wheeler. If you have an insurance policy with a low IDV, you may end up receiving a smaller payout than the actual cost of your bike. On the other hand, if you have a high IDV, you may end up paying a higher premium than required. Hence, it is essential to choose the right IDV for your bike insurance policy to ensure that you get the best value for your money.
How to Calculate the IDV of Your Bike?
The formula to calculate the IDV of your bike is as follows:
IDV = Manufacturer’s Listed Selling Price – Depreciation
The depreciation value is calculated based on the age of the bike as per the following table:
| Age of the Vehicle | Depreciation Percentage |
| Less than 6 months | 5% |
| 6 months to 1 year | 15% |
| 1 to 2 years | 20% |
| 2 to 3 years | 30% |
| 3 to 4 years | 40% |
| 4 to 5 years | 50% |
For example, if the manufacturer’s listed selling price of your bike is $10,000, and the bike is two years old, the IDV of your bike will be calculated as follows:
IDV = $10,000 – (30% of $10,000)
IDV = $7,000
In this case, the IDV of your bike will be $7,000, which means that you can claim a maximum of $7,000 in case of total loss or theft of your bike.
How to Choose the Right IDV for Your Bike Insurance Policy?
Choosing the right IDV for your bike insurance policy can be a tricky task. While a higher IDV will provide you with a higher sum assured, it will also result in a higher premium. On the other hand, a lower IDV may result in a lower premium, but it may not provide adequate coverage in case of total loss or theft of your bike.
Here are some factors that you should consider while choosing the right IDV for your bike insurance policy:
Age and Condition of the Bike: The age and condition of your bike are critical factors to consider while choosing the right IDV. If your bike is new, you should opt for a higher IDV as the depreciation value will be lower. On the other hand, if your bike is old and has a lot of wear and tear, you should opt for a lower IDV as the depreciation value will be higher.
The market value of the bike is an important factor to consider when determining the right IDV for your bike insurance. It helps you get a fair and reasonable value for your bike and ensures that you’re not overpaying for your coverage. To determine the market value of your bike, you can check online marketplaces and classified ads to see how much similar bikes are selling for. This will give you a good idea of how much your bike is worth and help you choose an IDV that’s appropriate for your bike’s value. It’s important to keep in mind that the market value of your bike may change over time, so it’s a good idea to review your IDV periodically and adjust it as needed. By choosing the right IDV based on the market value of your bike, you can ensure that you’re getting the best value for your two-wheeler insurance.
How is IDV Calculated?
The IDV of your bike is calculated based on its manufacturer’s listed selling price minus the depreciation cost. Depreciation is the reduction in the value of the bike over time due to normal wear and tear. As a general rule, the older the bike, the higher the depreciation and the lower the IDV.
Here’s a rough calculation of how IDV is calculated:
Manufacturer’s listed price of the bike (ex-showroom price) – depreciation = IDV
The depreciation rate for different parts of the bike is usually determined by the Insurance Regulatory and Development Authority of India (IRDAI). The depreciation rate of the bike’s value increases with the age of the bike. Here’s a chart of the depreciation rate for bikes:
Up to 6 months: 5%
6 months to 1 year: 15%
1 year to 2 years: 20%
2 years to 3 years: 30%
3 years to 4 years: 40%
4 years to 5 years: 50%
How Does IDV Affect Your Bike Insurance Premium?
The higher the IDV of your bike, the higher the premium you pay for your bike insurance. This is because the insurer is assuming a higher risk of loss in case of theft, damage, or total loss of the bike. However, it’s important to note that having a higher IDV doesn’t always mean you’ll have to pay a higher premium. Many insurers offer discounts and other benefits that can help you lower your premium without compromising your coverage.
How to Determine the Right IDV for Your Bike
Choosing the right IDV for your bike can be tricky. On the one hand, you want to ensure that you’re getting the best value for your bike in case of theft, damage, or total loss. On the other hand, you don’t want to pay a higher premium than you need to.
One way to determine the right IDV for your bike is to consider its current market value. Check online marketplaces and classified ads to see how much similar bikes are selling for. This will give you a good idea of how much your bike is worth and help you choose an IDV that’s fair and reasonable.
Another important factor to consider is the age of your bike. As we mentioned earlier, the depreciation rate increases with the age of the bike. This means that the IDV of an older bike will be lower than that of a newer bike. Keep this in mind when choosing your IDV, and be realistic about the value of your bike.
Conclusion
In conclusion, IDV is an important factor to consider when purchasing bike insurance. It determines the maximum amount you can receive in case of theft, damage, or total loss of your bike. By understanding how IDV is calculated and how it affects your insurance premium, you can make an informed decision when choosing the right coverage for your bike. Be sure to choose an IDV that’s fair and reasonable based on the current market value and age of your bike, and consider taking advantage of any discounts or benefits offered by your insurer to lower your premium without compromising your coverage.
