IDV in Bike Insurance

IDV stands for Insured Declared Value and is one of the many key factors that establish the premium that you’re required to pay for your two-wheeler insurance plan. The Insured Declared Value uses multiple variables like the age of the vehicle, model, registration location, etc. 

According to the Motor Vehicles Act, it is mandatory to get your vehicle insured. Insurance is vital if you are planning to purchase a two-wheeler insurance plan soon. 

Now that you know what IDV is in bike insurance, let’s take a look at how it is calculated. This way, you can get a much better understanding of the concept. Check out the table below for more information on the depreciation rates used in IDV calculations.

Here’s an example to help you understand the calculation of IDV value of a bike that’s 2.5 years old.

Assume that you own a Yamaha FZ S FI motorcycle that you bought 2.5 years ago. At the time of purchase, the price of the bike was ₹1.25 Lakhs. What would be the IDV value for the bike now?

Since the bike is 2.5 years old, its depreciation rate would be 30%. To find out the IDV for your bike, you would have to subtract the depreciated value from the original purchase price. Let’s take a look at how it is done.

• IDV = Purchase price - 30% of purchase price

• IDV = ₹1.25 Lakhs - 30% of ₹1.25 Lakhs = ₹87,500

As you can see, the current IDV of your Yamaha FZ S FI motorcycle is ₹87,500.

The value of a two-wheeler depreciates every year, with the age of the vehicle. Insurance companies consider depreciation value upon IDV declaration made by the policyholder during policy renewal. The rate of depreciation in bike insurance plays a crucial role during premium payments and claim settlement procedures.

Check out the two-wheeler depreciation rate to understand the IDV in bike insurance calculation by the insurance companies in the table below.

**Note - The rate of depreciation and IDV in bike insurance depends upon the norms and policies of the insurance companies. 

The IDV calculator is a crucial tool when it comes to choosing the right two-wheeler insurance. While making such calculations, you must keep in mind the fact that your values and information must always remain true and accurate. Even the slightest discrepancy can alter your IDV, insurance premium price, coverage, and claim settlement. 

Here’s how calculating your IDV can be very helpful to you.

• Calculating your IDV can make you aware of multiple aspects surrounding your financial future. 

• You can learn about your bike’s market value. 

• The calculator can help you estimate the premium price you might have to pay for your bike insurance. 

• You can understand the extent of coverage you can claim in the event of total loss through theft, 70% damage (or more) of your vehicle, etc. 

Declaring a high or low IDV will have its good and bad consequences on similar degrees. Here’s what those consequences could look like.

The insured declared value of your two-wheeler is very important when it comes to purchasing or renewing your bike insurance. Given below are all the reasons why your best IDV for bike insurance is very crucial. 

• It determines the maximum amount the insurance company will be willing to pay you in case of total loss

• It helps you make a sound and informed decision regarding your bike insurance renewal or application

• It contributes to determining the premium price you might have to pay for your bike insurance

• It makes sure that the compensation you receive for total loss or theft of your bike is just and fair

IDV is one of the crucial elements in evaluating the premium of the policy and the claim settlement amount. IDV determines the value of the two-wheeler during the policy purchase. The higher the IDV declared by the policyholder, the higher the premium amount will be.

It is advisable to quote the realistic IDV and not a lower value, as it may create issues during the claim procedure. At times, policyholders intentionally quote a lower IDV in bike insurance to save on premium amount. Consequently, they might end up paying lump-sum amounts from their pockets for the loss/ damage in the vehicle. After all, the insurance company will release the claim amount as per the IDV mentioned in the policy.

The IDV in bike insurance is determined and updated in the records during insurance policy renewal. The applicable depreciation value will be deducted from the existing IDV. A new IDV will be derived to determine the premium payment amount during the insurance policy renewal.

The policyholder must check the proposed IDV and premium payment amounts by evaluating the market price of their two-wheeler. In case, the policyholder is not satisfied with the proposed values, the policyholder can ask the insurance company to revise it as per the market. IRDAI offers a 15% plus/minus window for the policyholder, to negotiate the IDV and come to a mutual agreement. The policyholder can also browse policy plans offered by other insurance companies for their vehicles.

In the case of a bike that’s older than 5 years, the method of calculation of IDV tends to change, as compared to the calculations of vehicles that are not older than five years. The IDV for such motorbikes is calculated based on factors such as the state of its components and the serviceable condition of the vehicle. The IDV of the bike is also dependent on the materials from which its components are made.

For bikes that are older than 5 years, the final IDV is mutually agreed upon by you and the insurance provider.

It is okay to be confused between the concepts of IDVs and premium prices. While both are widely different concepts, they are related. After all, the IDV of your bike determines the price of your bike insurance premium. Hence, here’s all that makes the two of these factors different and related at the same time. 

The declaration of the IDV in bike insurance is beneficial for the policyholders to get a fair compensation amount during claim settlement from the insurance companies. However, there are times when policyholders declare the wrong IDV either to save some on premium payments or to get extra fund assistance during claim assistance.

The wrong IDV declaration will lead to the loss of the policyholder in the following ways. 

• Quoting a lower IDV of the two-wheeler during the policy purchase or renewal, will lower the compensation amount in a claim settlement. The policyholder will have to then personally pay the remaining repair charges.

• Quoting a higher IDV of the two-wheeler during the policy purchase or renewal, intending to get a higher compensation amount in a claim settlement is also a failed attempt. Insurance companies will evaluate every aspect during the claim procedure and will not blindly release the amount by only taking declared IDV into consideration. In such a scenario, the policyholder will get a fair amount from the insurance company in claim settlement irrespective of making pricey premium payments.

Now that you’re fully aware of what IDV is in bike insurance, you know that declaring the right value for your bike is crucial. This way, you can ensure that the insurance policy covers the loss that you sustain more comprehensively.

Whether your insurance plan is up for renewal or looking to purchase one for your new motorcycle, Bajaj Markets can help you make the right decision. Thanks to the plethora of different bike insurance plans available on the website, you can take your time comparing them with one another. Once you’ve made your decision, you can simply proceed to purchase it online within just a few minutes.