The IDV (insured declared value) of your bike is the amount that you receive as compensation from your two-wheeler motor insurance in the event of theft or total loss of your bike in an accident. Such losses can truly be devastating and the reimbursement you receive can go a long way in ensuring you can at least afford a new vehicle or pay back your lender, if the bike was under a loan.
The IDV is one of the most important aspects of your two-wheeler insurance policy. Yet, many bikers do not have much knowledge of what IDV means or how its value is computed. It is extremely essential that you have a thorough understanding of the IDV of your vehicle so that you are able secure the right coverage when buying two-wheeler insurance. If your IDV is set too low, your will receive very less compensation in case of total loss or damage.
Now, you might wonder what factors go into the calculation of the IDV of a two-wheeler. In this article, we will take you through the basics of what you need to know about how the IDV is calculated. We will also take a look at the main factors that play an important role in this calculation.
The basics on two-wheeler IDV calculation for bike owners
The IDV of your bike in your two-wheeler insurance is calculated as the vehicle’s present value in the market less any depreciation it has undergone. The market value is based on the manufacturer’s estimate of the bike’s selling price. The percentage of depreciation is quite low at 5% for bikes that are 6 months old or less and rather high at 50% for bikes that are between 4 to 5 years old. It is important to note that the IDV does not include the amount you paid for the vehicle registration and tax charges. Nor is the insurance expense included.
Factors that influence the IDV for two-wheelers
The main factors taken into consideration when deciding the IDV of a two-wheeler are:
- Model and make of the two-wheeler
- Registration date and city of registration of the two-wheeler
- Age of the two-wheeler
Impact of IDV on two-wheeler insurance premium
Do bear in mind that the IDV has an impact on your two-wheeler insurance premium. A low IDV leads to a lower premium and this often tempts many people to set a low IDV in an effort to save money on premiums. However, this may prove to be a huge mistake in the long run if you meet with an accident that sees your bike damaged beyond repair. You will receive less than what your bike is actually worth when you raise a claim. So, always set the correct IDV when buying two-wheeler insurance. You may seek professional help from insurance advisors in order to arrive at the correct IDV figure.
We hope this article has proved helpful in improving your knowledge and awareness of the IDV of your bike in insurance. Remember to always renew your two-wheeler motor insurance policy on time to enjoy the security that continued coverage brings.
Always wear a helmet and ride safely!