How To Calculate IDV in Bike Insurance?

—

While buying bike insurance, you may have come across the term IDV (Insurance Declared Value) and must have wondered what it means and how it affects your insurance premium. IDV in bike insurance is the insured declared value or the maximum pay-out amount given by the insurance company during the claim settlement.

IDV in bike insurance plays a very important role when buying two-wheeler insurance. Keep reading to understand IDV, its importance, how to calculate it, and other important elements of IDV.

What is IDV in Bike Insurance?

IDV or Insured Declared Value is the maximum amount for which your bike can be insured. In case your motorcycle is involved in an unrecoverable theft or faces irreparable damage, IDV is the sum insured payable to you as the insured person. To put it simply, IDV in bike insurance is the current market price of your bike.

Significance of IDV in Bike Insurance

IDV plays a very important role in bike insurance and allows you to make an informed decision when purchasing a two-wheeler insurance policy. The reasons why IDV is significant in bike insurance are:

1. Claim Amount Depends Upon IDV

IDV is the highest amount the policyholder receives in case of total loss or damage to your bike. Therefore, it is important to state the correct IDV value of your bike because, in case of a claim, you will receive a lesser value if the stated IDV value is less, which may not be enough to cover your loss or damage. 

2. Determines the Correct Value of the Bike

IDV helps determine the correct value of your two-wheeler, as this value depends on important factors like the bike’s make, model, registration city, and CC.

3. Affects the Two-Wheeler Insurance Policy Premium

IDV also plays an important part in the premium you pay for your bike insurance policy. The lower the IDV, the lower your premium. Some individuals state incorrect IDV values to reduce the amount of premium. However, this can prove to be a big mistake in the case of claims, as they would receive a lesser value, which may not be enough to cover the loss or damage.

Two-Wheeler IDV: Rates of Depreciation

Depreciation is another term used to calculate the premium amount, and it plays a key role in deciding the ID and the payable premium.

Below is the depreciation percentage table as per the Indian Motor Tariff:

How to Calculate IDV?

IDV bike value calculator is a simple tool that is offered by various insurers. With the calculator, you can easily determine the market value and the right premium for your bike. Moreover, an IDV calculator also helps you determine the right claim payout amount when the cost of repairing the damage is more than 75% of the sum insured (IDV)

The formula for calculating depreciation in bike insurance is given below.

• Calculation of IDV of a Non–Modified Bike

Insured Declared Value = MRP of the Bike – Appropriate Depreciation Value

• MRP is the bike’s listed ex-showroom price by the manufacture
• Depreciation is taken as per the industry standard
• Calculation of IDV of a Modified Bike
• IDV = (MRP of the Bike – Appropriate Depreciation Value) + (Price of Vehicle’s Externally Fitted Accessories – Their Depreciation Value)

Factors Affecting the (IDV) Insured Declared Value

Listed below are some of the important factors that affect the IDV of your two-wheeler:

1. Age of the Bike: Older bikes have lower IDV due to depreciation

2. Make and Model of the Bike: Different models and makes hold different market values, and that affects the IDV

3. Depreciation Rates: Standard Depreciation rates are applied depending on the age of the bike

4. Accessories or Modifications Made to the Bike:  Additional accessories added to the bike may also affect the IDV 

Final Words

Understanding the value of IDV in bike insurance for every two-wheeler owner is crucial, as it can directly affect the claim settlement process and the premium you pay for your policy. Remember to use an IDV calculator and compare different insurance policies to make the right decision. Stay informed and safeguard your two-wheeler with the right bike insurance policy.

—

This content is brought to you by Rajat Singh

iStockPhoto