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IDV in Bike Insurance: Meaning, Calculation and How it Works
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 IDV in bike insurance? 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 an IDV in two-wheeler insurance.
So, yet another year has passed and it’s time to renew the bike 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 Bike Insurance Policy’
What is IDV in Bike Insurance?
Insured Declared Value is what your bike is valued at in the market, after calculating the depreciation on it. 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 bike?
Depreciation rates for your Bike
| Age of the Bike | 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 Bike
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.
What factors are considered to calculate the IDV for a bike?
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
How to calculate IDV of two-wheeler that is more than five years old?
The IDV in bike insurance is calculated based on your bike’s manufacturer’s selling price and the depreciation calculated over the years. Until up to 5 years, the depreciation of the same goes from 5% for a relatively new bike to up to 50% for a bike of 4 to 5 years old.
However, in case your bike is more than 5 years old, the IDV of the same is calculated by your insurer. In this case, your insurer will essentially decide the same as per the condition of your two-wheeler and its parts.
Check: Use Bike Insurance Calculator to get the premium and IDV value for your vehicle.
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 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 ‘totalled’, 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!
What is the significance of IDV in Bike insurance?
Your IDV is one of the most important part of your bike insurance. This is because it not only determines the real value of your bike but also determines the amount you will pay as your bike insurance premium.
It is the right value of your bike - 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 for you based on that, for what it deserves.
Your bike insurance premium depends on this - 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 claim amount depends on this too - Your IDV is also basically the highest amount you can receive in case of damages 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 case of a claim too, you will receive a lesser amount, and that amount may not be rightly sufficient for your bike.
FAQs about IDV in Bike Insurance
Why is it important to declare the correct IDV?
It’s important to declare the correct IDV as this will also determine the maximum amount you will receive in case of damages 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 calculate IDV of two-wheeler?
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 calculator for two wheeler online, like this one.
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 damages and losses. So, lower your IDV and premium, the lower will be your maximum claim amount.