For when you lose something, you gain something.
So, yet another year has passed and it’s time to renew the insurance of your beloved bike yet again. Most of us just pay the Insurance premium and get done and dusted with it. But do you know what is the total worth of your vehicle? Do you know how much you will get back if your 2-Wheeler gets stolen or worse, totally destroyed?
Well, that’s how we arrive at IDV, or Insured Declared Value.
IDV: It basically stands for ‘Insured Declared Value’.
Note: IDV is valid only under ‘Comprehensive Insurance Policy
So, what is IDV for your 2 wheeler?
Insured Declared Value is what your motorcycle is valued at by the insurer after calculating the depreciation on your motorcycle. Let’s put it across with a simple example-Say you buy a brand new bike for 1lac (Excluding the cost of registration, road tax, insurance, accessories et al.). Your IDV at the time of purchase will be 1 lac since your bike is brand new. But as your bike gets older, its value starts to depreciate, and so does the IDV. So, say your bike is worth 65K after two years. Your IDV will also be 65K.
Now coming to the main point where most people get confused. IDV calculates the depreciation of your vehicle according to the ‘manufacturer’s specifications’ or ‘the amount the manufacturer values your bike at’ and NOT the value you can personally sell the bike at i.e. someone may offer to buy your bike for even 85K, but the IDV will still stand at 65K. So, what are the depreciation rates for your 2-wheeler?
Depreciation rates for your 2 Wheeler
6 months and below - 5%
6 months to 1 year - 15%
1-2 years - 20%
2-3 years - 30%
3-4 years - 40%
4-5 years - 50%
5+ years - IDV mutually decided by the insurance provider and policyholder
Now, how is IDV for your 2 Wheeler calculated?
The calculation of your IDV is pretty simple: It is the ex showroom price/current market value of the vehicle minus depreciation on its parts. The registration cost, road tax and insurance cost are not included in the IDV. Also, if there are accessories that have been fit later, IDV of those parts will be calculated separately.
IDV vs Premium
It is imperative to have the right IDV for your 2 Wheeler. Some insurance providers offer you low premium products at the cost of lowering your IDV. And that’s fatal. Why? Simply because in case of theft or total loss, when you need to claim your insurance, you will get much lesser value for your car, simply because you had a lower IDV. Your IDV is directly proportional to your premium. Lower the premium, lower the IDV and vice versa! Thankfully at Digit, we let you set your IDV, so you know exactly what we owe you!
At the end of the day what is the advantage of IDV anyway?
God forbid, your bike is stolen and never to be found, or even worse, it’s ‘totalled’, which basically means it’s irreparable after an accident! In both cases, your insurance company will refund you the entire amount mentioned on your insurance policy IDV!
After all, once you don’t have a bike to sell, how will you find a buyer anyways😊
To learn more about the jargons of two-wheeler insurance and their benefits click here.
Also, do you want to know about IDV for your car? Read this blog to know!