What is IDV in Two-wheeler Insurance?
IDV or Insured Declared Value is the most important component in a Bike Insurance policy. It plays a crucial role in determining the premium for your bike insurance policy. It is important to understand what IDV is and how it is calculated so that you will have a clear idea while buying a bike insurance policy.
What is meant by IDV?
IDV in short of Insured Declared Value is the total amount of claim that the insurer will provide you in the event of a major damage or theft of the vehicle. IDV plays a vital role in deciding the premium and helps you take a well-informed decision while purchasing a bike insurance policy. Eg: if the IDV of a stolen vehicle is Rs. 75000, then the insured will receive Rs. 75000 as the claim. The lower the IDV, the lower the premium you would require paying for your policy.
What is the importance of IDV?
Determining the right value for your two-wheeler
IDV helps in determining the right value of the two-wheeler. It depends on various factor like bike’s make, model, bike’s CC, Registration.
Determines the premium amount
IDV not only determines the value of your two-wheeler but also helps in determining the premium amount that you will have to pay
Claim Amount
IDV is the highest amount that the policyholder that receive in the event of total damage or theft. At times, some people reduce the IDV of their vehicle in order to obtain a lesser premium; however, they will be at distinct disadvantage if they lose their two-wheeler in theft or damage, as the claim amount depends on the declared IDV.
How to Calculate the IDV of Two-Wheeler Insurance?
IDV is largely determined by the market value of the vehicle at the time of purchase and then adjusted with depreciation.
IDV = MRP of the Bike – Depreciation Value
Many websites offer IDV calculator that you can use to determine the market value and the right premium for your bike insurance policy.
Rate of Depreciation
Depreciation is another factor to be taken into account when it comes to calculating the IDV. With time since the purchase of a vehicle, its value decreases. The decrease in value from the buying price is referred as the depreciation value. The depreciation is adjusted while calculating your payout amount. Life of Vehicle****Depreciation ratioNot more than 6 months5%6 months - 1 Year15%1 Year – 2 Years20%2 Years – 3 Years30%3 Years – 4 Years40%4 Years – 5 Years50%
What about the IDV of vehicles aged more than 5 years?
- The IDV of vehicle is directly proportional to the rate of depreciation. The older your bike is, the lower would be your IDV.
- For a vehicle that is more than five years old, the depreciation value is calculated based on the condition of its spare parts and its serviceable condition
- For obsolete models, the IDV is determined by mutual agreement between the insurance company and the policy holders.
- Some companies appoint Surveyors to arrive at the correct IDV for an aged bike. Of course, it leads to additional cost in the premium that the policyholder has to bear.
Factors influencing the IDV
IDV of Bike Insurance is determined based on the following factors,
- The age of the Bike
- Bike’s registration date
- City of registration
- Fuel Type
- Make, Model, and Variant
- Policy Tenure
