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Home / Two Wheeler Insurance / IDV in Bike Insurance - Insured Declared Value in Two Wheeler

IDV in Bike Insurance

IDV is basically the market value of your vehicle. It is only valid under the comprehensive bike insurance policy. Insured Declared Value is the value of your bike in the market after calculating its depreciation. You can calculate your bike’s IDV by subtracting the depreciation on the vehicle’s part from its current market value.

Can You Change Your Two-Wheeler's IDV Value?

Insurance companies allow individuals to choose a customized vehicle IDV. There are a couple of ways to change the value of your twp-wheeler.

Increase
the IDV Amount
Decrease
the IDV Amount

Increase the IDV Amount

You are entitled to substantial compensation if your two-wheeler has beyond-repair damage. You can talk to your insurer and ask them to increase the IDV. However, it will increase the premium that you would have to pay.

Decrease the IDV Amount

You can reduce the IDV of your two-wheeler if you think the base value is high. You can talk to your insurer and ask them to reduce your IDV. However, the claim amount will reduce as well. The only reason to reduce the IDV can be if you want to decrease the premium on your two-wheeler.

You must know that the own damage bike insurance premium is around 2 to 3 per cent of the IDV. Thus, changing the IDV will not result in a substantial change in the premium. You must keep your IDV at the maximum to ensure maximum financial security.

IDV Value and Depreciation In Five Years and Above Aged Two-Wheelers

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 If the two-wheeler above 5 years is obsolete, the insurer and the policyholder can mutually decide on a figure.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).

Two-Wheeler IDV: Rates of 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	Mutually decided by insurer and policyholder

For bikes that are more than 5 years old, the IDV is determined after an agreement between you and the insurer. The insurance company will determine the premium based on your bike’s make, model, variant, its age, availability of spare parts, previous claims and the overall condition of your bike.

IDV Calculator for Bike

It is one of the most time-saving and useful things to use online calculators for determining your two-wheeler's IDV. The selling price set by the manufacturer minus depreciation gets you the IDV for your two-wheeler. You can use an online calculator and determine the right market value and the premium amount. Registration costs and insurance are not included in the Insured Declared Value (IDV). You have to pay an extra cost for parts that are not factory-fitted.

How to Calculate IDV in Two-Wheeler Insurance

The market value of a vehicle is the IDV calculator for two-wheelers. The market value of a two-wheeler keeps changing with time, and IDV in two wheeler insurance includes the rate of depreciation. The premium of your two-wheeler is determined by its IDV . Your bike's market value calculates IDV in bike insurance. It is calculated after calculating the depreciation.

For example, you buy a new bike for one lakh (excluding accessories, insurance, tax, and registration). The IDV of your bike will be one lakh as it is new. The bike's IDV will reduce with time as the value of your bike will depreciate. So, if your bike's market value is Rs. 75,000 after two years, the IDV will also be Rs. 75,000. The manufacturer's price is the price at which depreciation is calculated in IDV. It is not the value at which you can personally sell your two-wheeler. Someone might offer you Rs. 85,000. However, the market value will stay at Rs. 75,000.

IDV vs Premium in IDV on Two-Wheeler Insurance

When it comes to two-wheeler insurance, the IDV plays an important role. IDV stands for Insured Declared Value of your vehicle. It is the highest amount that your bike insurance company will pay in case your bike is declared to be ‘total loss’ after an accident, or if your bike is stolen.

Simply put, the IDV of your bike is like the market value of your bike. When you buy a new insurance policy or renew your existing one, the premium is determined by the IDV. Your insurance company, based on the age of your vehicle, gives you a price range from which you can choose the most suitable IDV.

• Higher IDV = Higher Premium

When you choose a higher IDV, it means that in case of loss of your bike, your insurer will have to pay you a higher compensation. Because of this increased liability, you are charged a higher premium.

• Lower IDV = Lower Premium

When you choose a higher IDV, it reflects that you are ready to settle for a lower compensation in case of theft or total loss of your vehicle. Therefore, the premium you pay will be comparatively less.

So, when it comes to IDV vs premium, you need to make an informed decision as the IDV will determine the premium as well as the compensation. If you live in an area prone to accidents, it would be better to opt for a higher IDV. However, if you live in a safer region, have been a careful driver, and want affordable coverage, then a lower IDV might be adequate.

Factors Affecting the (IDV) Insured Declared Value

Insurance Policy Term

The insurance policy term will cause changes in the premium that you have to pay yearly. If you increase the policy term, your total premium payable will increase, but the amount payable each year will decrease. On the other hand, if you reduce the policy term, your total payable premium will fall, and the yearly premium payable will increase.

Fuel type

Your two-wheeler's fuel type affects the IDV. Petrol variants are generally construed as default or are on the lower side. On the other hand, diesel variants will comparatively have a higher IDV.

City of Registration

Insurers in different cities determine the IDV differently, and the IDV will depend on your registration city. Registration costs vary from city to city as well. Hence, the registration city will be a factor when deciding on the IDV in bike insurance.

Accessories Added

If you have added accessories to your two-wheeler that are not factory fitter, the insurer will add the amount to your IDV. It is calculated like this: IDV = (Manufacturer's Selling Price – Depreciation Cost) + (Accessories Cost – Depreciation of These Accessories).

Variant, Model, and Make of your Two-Wheeler

Different two-wheelers have different market values, and a different market value means a different IDV. The market value of your two-wheeler depends upon its variant, model, and make.

Age of Two-Wheeler

The age of your two-wheeler matters when calculating the IDV in two wheeler insurance. As the age of your two-wheeler increases, the depreciation also increases, and the IDV goes down. As depreciation gradually increases, you will see your IDV decrease progressively.

Two-Wheeler IDV: Rates of 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	Mutually decided by insurer and policyholder

Importance of High IDV In Bike Insurance

A higher IDV means higher financial protection for your two-wheeler. The following are some reasons why you should have a higher IDV for your two -wheeler insurance:

Financial Assistance if Your Two Wheeler Suffers Massive Accident Damage

Minor accidents can lead to a cracked windshield or a broken tail light. However, a massive accident can lead to your two-wheeler's engine being totaled. You cannot get a ruined engine repaired at the nearest garage. Damage of this magnitude requires financial assistance from your insurer, and a high IDV will ensure you get compensated handsomely for the repairs.

Financial Compensation For Theft

Individuals often lower their IDV because they feel they will never get into an accident. However, road accidents aren't the only thing that can occur. There are possibilities of bike theft as well. Moreso, if you own a high-end two-wheeler, the chances of theft increase. Another factor is an open parking space. A higher IDV ensures you are financially secure in case of theft of your two-wheeler.

Mental Peace

You can stay peaceful knowing your two-wheeler is covered and you are financially secure if you have a higher IDV. Even if something wrong happens to your vehicle, your insurer will compensate you for the loss. It will keep you free from worries and financially secure.

It is best to keep your IDV as high as possible, as a lower IDV may not be enough to cover damages in case you have to get compensation. Instead of thinking about bike insurance premiums, one should think more about financial security and safety.

Tips for Selecting the IDV

Selecting the right IDV is crucial; the tips given below can be helpful in making a well-informed decision. Read on:

• When you buy or renew your insurance, you will have to choose the IDV. Make sure to review the value carefully.

• Try to choose a suitable IDV. While a lower premium may sound tempting, think of the long term.

• For a bike older than 5 years, your insurer may rely on several other factors to determine the IDV.

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FAQ's for Insurance Declared Value (IDV) Bike Insurance Cover

1. Why is it important to declare the correct IDV?

It is important to declare the correct IDV as it will decide the maximum compensation you will receive in case of a claim.

2. How to calculate the IDV of a two-wheeler?

IDV value of bike is calculated by subtracting depreciation from the market value of your two-wheeler. You can also use an IDV Value Calculator for Two-wheeler Insurance

3. Is it a good idea to lower your IDV for a lower premium?

It is not a good idea to lower your IDV for a lower premium because if you raise a claim, you might not get enough financial help in case the damage is a lot. The higher the IDV, the better, as you can claim a higher amount if you require a claim.

4. What are the benefits of a higher IDV?

A higher IDV ensures you get higher financial compensation and assistance when you make a claim. The higher the premium, the higher the IDV. You always want the maximum IDV to get the highest possible compensation in case of a requirement.

5. What are the depreciation rates for two-wheelers?

Depreciation rates for two-wheelers are as follows: 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: Mutually decided by insurer and policyholder

6. What will happen if I incorrectly declare my IDV?

You should always state the correct IDV of your vehicle as an incorrect IDV may result in an incorrect compensation for you. If you state your IDV lower, you might get lower compensation. If you declare a higher IDV, your premium will be higher. The current selling price is considered and not the price at which you have purchased or sold your two-wheeler.

7. What Happens if I Opt For a Lower Insured Declared Value?

Let us take a look at what would happen if you would select a lower Insured Declared Value for your two-wheeler:
- The premium amount of your insurance plan would reduce.
- It would help you in saving money on your two-wheeler insurance plan.
- But, the sum insured of your insurance plan would get reduced.
- Thus, you would get lesser compensation in the event of total damage or loss of your insured bike.

8. What is IDV in bike insurance?

IDV stands for Insured Declared Value. Simply put, it is your vehicle's current market value. IDV is the maximum amount of money that your insurer will pay you in case your bike is stolen or gets damaged beyond repair. When you buy or renew your bike, the IDV plays a major role in determining the IDV.