Is Higher IDV Considered Better in Bike Insurance?

If you have a two-wheeler, it is imperative that it will lose its value as time passes. Plus, you may never know when a mishap occurs, and your vehicle gets damaged. Hence, it is mandatory for you to get an insurance policy for it. Apart from the accidental damage claim, NCB, and others, IDV is a critical aspect that needs your utmost attention while buying or renewing bike insurance online. Some of you must be thinking about what IDV is in 2 wheeler insurance, right! Well, keep reading to know better!

What is IDV in 2 Wheeler Insurance?

Let’s deal with the biggest frog first. The term IDV is expanded as Insured Declared Value. The IDV is the sum affixed by the insurance company that will be paid to the insured person if his or her two-wheeler faces complete damage in a road accident or gets stolen. Basically, the IDV is the market value of the vehicle, and it decreases with each passing year. The calculation of the IDV is done based on various factors like:

1. The age of the bike or any other two-wheeler
2. Type of fuel the bike runs on
3. Make and model of the two-wheeler.
4. City of registration
5. The registration date of the bike
6. The insurance policy terms

As your two-wheeler loses its value after each year, it is necessary for you to pay attention to the IDV insured in your policy; here is a table showing the depreciation rate based on the number of years:

Significance Importance of IDV

The Insured Declared Value (IDV) plays a crucial role in bike insurance, indicating the maximum compensation the insurer will provide in case of theft or total loss. Opting for a higher IDV enhances financial protection for the policyholder by aligning with the bike's current market value. This ensures that in the event of a mishap, the policyholder receives adequate compensation to cover the loss or damage incurred, thereby offering peace of mind and security against unforeseen circumstances.

Impact of IDV on Two-wheeler Insurance Premium

IDV significantly impacts the premium for two-wheeler insurance. A higher IDV correlates with a higher premium, while a lower IDV leads to reduced premium costs. Striking a balance between the IDV and premium is crucial to ensure adequate coverage without overspending. Policyholders must assess their coverage needs and budget constraints to determine the most suitable IDV that offers sufficient protection against potential risks while maintaining affordability.

How Does IDV Affect Bike Insurance Renewal?

During bike insurance renewal, IDV undergoes recalibration, considering factors like vehicle depreciation, age, and prevailing market value. This adjustment ensures that the renewed policy offers coverage commensurate with the current worth of the bike. Opting for an appropriate IDV during renewal is vital to ensure continued and adequate coverage. Renewing with an outdated or inaccurate IDV may result in underinsurance, where the compensation offered may not sufficiently cover the bike's actual value in the event of a claim. Conversely, overvaluing the IDV may lead to higher premiums. Hence, policyholders must review and adjust the IDV during renewal to accurately reflect the bike's current value, thereby ensuring comprehensive coverage and adequate financial protection against potential risks and losses.

How to Calculate IDV for Two-wheeler Insurance?

Calculating IDV for two-wheeler insurance involves considering various factors to accurately determine the bike's current market worth. Insurance companies typically provide IDV calculators, simplifying the process for policyholders. Key factors taken into account during calculation include the bike's age, make, model, and depreciation rate. The depreciation rate is crucial as it reflects the decrease in the bike's value over time due to wear and tear. Insured declared value (IDV) = (The listing price of the manufacturer – Depreciation) + (Accessories fitted – Depreciation on such accessories)

Factors that Determine Your Two-wheeler's IDV

Various factors play a crucial role in determining the IDV of your two-wheeler, ensuring that your insurance coverage aligns with its current market worth:

1. The age of the bike significantly influences its IDV, as older bikes generally have lower values due to depreciation.
2. The depreciation rate is a key factor, representing the reduction in the bike's value over time due to wear and tear. The manufacturer's listed selling price serves as a reference point for determining the bike's initial value.
3. Optional accessories added to the bike can also affect its IDV, as they contribute to its overall value.

How Crucial is it to Arrive at the Right IDV?

During purchase or renewal of vehicle insurance online, it is highly necessary to arrive at the right IDV for security in the long run.

Is Higher IDV better?

For the most part, yes, a high IDV is better as it ensures higher value for your bike if it gets damaged or stolen. However, there are some caveats to consider:

Age of the Bike:

If your bike is older, opting for a high IDV may not be practical. You may not get the desired IDV, and if you do, it will come with a higher premium. Additionally, when a claim is processed, the depreciation value based on the bike's age might reduce the payout, even if you have chosen a higher IDV.

Depreciation:

The IDV is the market value of your vehicle at the time of insurance, adjusted for depreciation. As your bike ages, its IDV decreases due to depreciation, which affects the claim amount. So, is higher IDV better? It depends on multiple factors that you need to consider before deciding on an amount. The major factors are the age and the model of the two-wheeler. Understanding these will help you choose an appropriate IDV that balances coverage and premium costs effectively.

Is Lower IDV better?

If you are getting to pay less premium for a lower IDV, it is not like you got the best deal on your insurance. Just as higher IDV can be bad in the long run, settling at a lower IDV can also lead to financial losses. For instance, if your bike is two years old and you settle at an IDV, that could have been after three or four years. You did this to save on insurance premiums. Now, if your bike gets damaged due to any reason, you will get a low IDV. This will waste more of your investment than that you saved on low premiums.

What is the IDV Value for Bike Insurance & How to Determine it?

As we are well aware of what IDV is in insurance, let’s jump on to how to determine the value of the IDV of your vehicle. As listed above, there are many factors based on which the IDV of a bike is determined. Although here are some tips that you need to know:

1. The general formula for IDV calculation is, IDV = (Manufacturer’s price - Depreciation) + (Accessories not in the listed price - Depreciation)
2. If the vehicle is more than five years old, the IDV can be decided via the agreement between the insured person and the insurer.
3. If your vehicle is five years old, the amount of IDV is decided based on the condition of the vehicle (how much service it requires and the condition (various body parts of the bike).

Note: Higher the age of the vehicle, less will be the IDV of it. This is all about the IDV value for bike insurance!!

FAQ

Can you manually declare the IDV in a bike insurance plan?

Answer: No, policyholders cannot manually declare the Insured Declared Value (IDV) in a bike insurance plan. The IDV is determined based on factors like the bike's age, make, model, and depreciation rate.

What is the maximum IDV in two-wheeler insurance that you can opt for?

Answer: The maximum Insured Declared Value (IDV) in two-wheeler insurance is typically the manufacturer's listed selling price of the vehicle, excluding registration and insurance costs, at the time of policy issuance.

Can I opt for a lower IDV for my bike? 

Answer: Yes, policyholders can opt for a lower Insured Declared Value (IDV) for their bike insurance. However, it may result in reduced coverage and compensation in the event of theft or total loss.

Why does the IDV in bike insurance decrease every year? 

Answer: The Insured Declared Value (IDV) in bike insurance decreases every year due to depreciation, reflecting the reduction in the bike's value over time as a result of wear and tear.

Is the concept of IDV applicable to third-party bike insurance policies?

Answer: No, the concept of Insured Declared Value (IDV) is not applicable to third-party bike insurance policies. IDV is relevant only for comprehensive bike insurance policies, not third-party liability insurance.

What will be the IDV of a new Bike?

Answer: The Insured Declared Value (IDV) of a new bike is typically the manufacturer's listed selling price of the vehicle at the time of purchase, excluding registration and insurance costs.

What is a Bike's IDV outside of a showroom? 

Answer: A bike's Insured Declared Value (IDV) outside of a showroom refers to its market value in the used vehicle market, considering factors like depreciation, age, condition, and mileage.

Why is it crucial to declare the right IDV?

Answer: Declaring the right Insured Declared Value (IDV) is crucial as it ensures adequate coverage for your bike in case of theft or total loss, providing appropriate compensation without overpaying for premiums.

Can I increase the IDV value of my bike?

Answer: Yes, policyholders can increase the Insured Declared Value (IDV) of their bike by opting for a higher coverage amount at the time of policy renewal, subject to the insurer's terms and conditions.   *Standard T&C Apply *Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.