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What is IDV in Bike Insurance & How to Calculate Bike Depreciation Rate?
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 IDV, what IDV means in bike insurance and its importance for your bike’s coverage.
Let’s help you understand all you need to know about an IDV in two-wheeler insurance.
When it’s time to renew the bike insurance, most people just pay the insurance premium and are done with it. However, you need to know the total worth of the vehicle and the amount you will get back if the two-wheeler gets stolen or worse, destroyed up to no repair.
Well, that’s what IDV stands for, i.e., Insured Declared Value. Remember that IDV is valid only under Comprehensive Bike Insurance Policy.
What is IDV in Bike Insurance?
Insured Declared Value or IDV is the current value of your bike in the market, after calculating the depreciation on it. It determines the maximum payout you'll receive in case of theft or total damage to your bike due to an accident.
For Example, say you buy a brand-new bike for ₹1 lakh (excluding the cost of registration, road tax, insurance, accessories, etc.). 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 ₹65,000 after two years. Your IDV will also be ₹65,000, depending on different factors.
Now, remember that 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. This means that if someone offers to buy your bike for ₹85,000, the IDV will still stand at ₹65,000. So, think of it as your bike's insured value. A higher IDV means a bigger payout but also a higher premium.
What is the Importance of IDV in Bike Insurance?
In a bike insurance, your bike’s IDV determines the right value of your bike as it factors in various things such as the make and model of the bike, how long it's being used for, its cubic capacity, the city where its being used at, etc. Therefore, it’s important to state the correct IDV. Insurers will cover you based on that, for what it deserves.
Your premium is based on various factors such as your policy type, the city you ride in, the cc of your bike, the make and model of your bike, your claims history, and most importantly, your IDV.
Your IDV is also basically the highest amount you can receive in case of damage and losses. Some people tend to incorrectly state their IDV, hoping to reduce their premium. However, this only tends to be a disadvantage as in the event of a claim, too, you will receive a lesser amount, and that amount may not be sufficient for your bike.
What is IDV Calculator for Bike?
How to Calculate Your Bike's IDV?
Calculation of IDV in bike insurance is a simple process, which you can do using bike insurance calculator. If you have extra accessories that are not factory-fitted, then IDV is separately calculated by your insurer at an extra cost. Here’s the formula to calculate IDV in bike insurance -
- Calculating IDV for Bike Without Accessories: IDV = Price (ex-showroom) of the bike – Depreciation Value
- Calculating IDV for Bike with Additional/Externally Fitted Accessories: IDV = Price (ex-showroom) of the bike – Depreciation Value + (Price of accessories - depreciation value of accessories)
How To Calculate IDV for Two-Wheelers Over 5 Years Old?
What are the Factors Involved in IDV Calculation for Bikes?
Since your IDV reflects the market value of your bike, the following are some of the factors considered to calculate the IDV:
- The make & model of your bike
- Registration date of your bike
- The city you registered your bike in
- The type of fuel your bike consumes
- The age of your bike
- The type of your bike policy
- Your bike policy period
What is the Role of Depreciation in IDV Calculation?
Depreciation Rates Applicable for Bike
How Does IDV and Premium Affect Your Insurance Claim?
Why Should You Care So Much about Your IDV?
FAQs about IDV in Bike Insurance
Why is it important to choose the correct IDV?
It’s important to choose the correct IDV as this will also determine the maximum amount you will receive in case of damage and losses to or by your two-wheeler.
What will happen if I incorrectly declare my IDV?
If you incorrectly declare your IDV, you are indirectly stating a lower/higher value of your bike. Therefore, in case of claims- you will receive a lower amount if you’ve stated the wrong, lower IDV which won’t be enough for your bike and if in case you’ve stated a higher amount then the amount you will receive at the time of claims will also be higher.
How to check IDV value of bike?
You can approximately calculate your IDV by checking the market value of your bike and subtracting its depreciation on the same (based on how old it is). If you aren’t too sure how to go about it, you can also use an IDV bike depreciation calculator online.
Can I increase the IDV value of my two-wheeler?
At Digit, we allow you to customize your IDV. However, we’d always recommend stating the right amount as this will give you the right premium amount and will also give you just the amount you’ll need during claims. The higher your IDV, the higher will be your premium and maximum claim amount and vice versa.
Is it a good idea to go for a lower premium by reducing the IDV of my two-wheeler?
No, this isn’t a wise thing to do as in case of claims, you’ll end up receiving a lower amount that may not be enough for your respective two-wheeler. Remember, your IDV also reflects the maximum amount your insurer can compensate for in case of damage and losses. So, the lower your IDV and premium, the lower will be your maximum claim amount.
Should I keep my bike insurance IDV high or low?
It is recommended to choose a bike’s IDV value that is neither very high nor very low but at par with the two-wheeler's market value.
What is the difference between IDV claim and claim value for other repairable damages?
You claim IDV when there is a total loss of the two-wheeler. Whereas, in case of repairable damage, your insurer will settle the claim amount based on the extent of damage covered by your purchased policy.
Do I need to check the IDV even for a third-party liability policy?
No, IDV is not applicable to third-party policy as its premium rates for two-wheeler insurance is already set by IRDAI based on the cubic capacity of the bike's engine.
Is it possible to change the IDV while renewing bike insurance policy?
Yes, you can change the IDV while renewing the policy as the bike’s value may change over time due to many reasons including depreciation.
Can I change the IDV after purchasing the new bike insurance policy?
Yes, you can change the IDV depending on your insurer’s policies.
What is the scooter depreciation rate?
To know how much depreciation on bike per year, checkout the two-wheeler depreciation rate table, as per which the bike depreciation increases to 20% in two years, and further increases upto a maximum of 50% as the vehicle ages.
What is the IDV of bike after 1 year?
IDV in bike insurance for two-wheelers over 1-year-old is 20%, 30%, 40%, and 50% every year.
What if the IDV value of bike is low?
A low IDV in bike insurance means a lower premium and claim amount if your two-wheeler is stolen or totalled.
Do I need to reduce IDV every year?
No IDV depends on your vehicle’s age, condition, and other factors, and vehicle's current market value at the time of renewal. Therefore, the IDV automatically decreases every year due to bike depreciation rate.
How much is bike’s IDV after 5 years?
For two-wheelers older than 5 years, the IDV depends on their condition, model, manufacturer, and spare part availability. So, for vehicles older than 5 years, you can discuss with your insurer or use a bike depreciation calculator to determine the IDV value.