IDV in Bike Insurance

The two-wheeler depreciation calculator includes the depreciation rate and the age of the vehicle—the depreciation rate increases with the age of the two-wheeler. In a nutshell, the value of your two-wheeler decreases as its age increases. The two-wheeler depreciation calculator for vehicles aged above 5 years includes the condition of its parts. The IDV in two wheeler insurance is adjusted according to the materials used and is calculated as an average overall. If the two-wheeler above 5 years is obsolete, the insurer and the policyholder can mutually decide on a figure. Some insurers hire surveyors to determine the IDV in bike insurance.

As a bike owner, you would know that your bike is a depreciating asset. Every year, due to its wear and tear, its market value decreases. The rate at which a vehicle depreciates is decided by the Insurance Regulatory and Development Authority of India (IRDAI).

It is important that you do your due diligence and evaluate your coverage needs when picking IDV in your bike insurance policy. Choosing the correct IDV is vital in order to receive proper coverage, ensure lower out-of-pocket expenses, and maintain a budget. Here are some consequences of choosing the wrong IDV:

• Picking a lower IDV than required or Underinsurance

1. Reduced compensation:

IDV is a key factor that insurers consider when offering compensation in case of the insured bike’s theft or total loss. So, by choosing a lower IDV, the claim payout offered by the insurer may not be sufficient to get the bike replaced at its current market value.

2. Increased out-of-pocket expenses:

As choosing a lower IDV results in reduced compensation, it increases out-of-pocket expenses. For instance, if your bike gets stolen and you want to replace it with a bike of similar value, you will have to spend extra from your pocket, as the received claim amount will not be sufficient to cover it.

• Picking a higher IDV than required or Over-insurance

1. Higher premium payable:

Picking a higher Insured Declared Value or IDV of your bike will increase the premium of the bike insurance policy. So, to get that policy and maintain it year after year, you will have to spend a lot more than you would have for a policy with a more accurate IDV selection.

2. Overpaying for no extra payout:

If the selected Insured Declared Value (IDV) exceeds the bike’s actual market value, you can end up paying more for your insurance than you actually need. However, in the event of an actual insurance claim, instead of this inflated IDV, the insurer will likely take into account and compensate based on the bike’s actual market value or depreciated value. This means that the additional sum you paid for your bike insurance with a higher IDV will yield no increased claim benefit.

Hence, it is very crucial to choose the right IDV of your bike when buying bike insurance. Spend some time on research and try to find the correct IDV that ensures affordable insurance premiums and adequate coverage.