Two Wheeler Insurance with high IDV

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IDV in Two Wheeler Insurance

Simplifying insurance jargons to make your experience with insurance easier. That’s what we’re here for. One of the most common and often misunderstood jargons is the IDV. What is the IDV? And why is it so important for your bike’s coverage? Let’s break it down for you and help you understand all that you need to know about the IDV for your two-wheeler.

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 are done 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 two-wheeler gets stolen or worse, destroyed up to no repair?


Well, that’s what the IDV is for, i.e, Insured Declared Value.

IDV - IDV stands for Insured Declared Value and is nothing but the market value of your vehicle.

Note: IDV is valid only under ‘Comprehensive Insurance Policy’


What is an IDV in a Two-Wheeler Insurance?

Insured Declared Value is what your motorcycle is valued at in the market, after calculating the depreciation on your motorcycle. Let’s put it across with a simple example-say you buy a brand-new bike for Rs 1 lakh (excluding the cost of registration, road tax, insurance, accessories et al.). Your IDV at the time of purchase will be 1 lakh 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 Rs 65,000 after two years. Your IDV will also be Rs 65,000.

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 Rs 85,000, but the IDV will still stand at 65,000. So, what are the depreciation rates for your 2-wheeler?

Depreciation Rates for your Two-Weheler

Here are the usual rates of depreciation charged on your two-wheeler, depending on its age:

Duration

Depreciation %

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


IDV Calculator for your Two-Wheeler

The calculation of your IDV is pretty simple: It is the ex-showroom price/current market value of the vehicle minus the 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 two-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 a 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 to expect.


Why should you care so much about your IDV?

God forbid, your bike is stolen and never to be found, or even worse, it’s ‘totaled’, which basically means it’s irreparable after an accident! In both cases, your insurance company will refund the entire amount to you, mentioned on your insurance policy IDV!