What is IDV Value in Bike Insurance?

Posted on: Dec 12, 2022 | | Written by:

What is IDV Value in Bike Insurance?

Published on December 12, 2022. EST READ TIME: 3 minutes

One common misconception about insurance is that it is difficult to understand. This view is most likely influenced by the use of insurance phrases like IDV or Insured Declared Value. It is challenging to understand the essence of such phrases simply by reading them. Thus, an explanation is necessary. Continue reading to learn more about this IDV and learn about the use of Insured Declared Value calculation in bike insurance online policies, so you can take an educated decision when purchasing bike insurance plans.

What is IDV in Bike Insurance?

The highest sum promised by the insurance provider that an insured individual is anticipated to receive in the form of payment in the case of total loss or damage to the covered vehicle is known as the Insured Declared Value or IDV in bike insurance. It is known as the insured vehicle's current market valuation. In other terms, IDV is the maximum amount an insured may claim for compensation for damages to the covered vehicle.

Whenever an insured chooses comprehensive vehicle insurance coverage, IDV is considered. The premium paid by the customer is directly proportionate to the vehicle's IDV. The higher the IDV, the higher the premium, albeit a premium is typically 2 per cent to 3 per cent of the overall value of Insured Declared Value.

Importance of IDV

Here are the benefits of Insured Declared Value:

1. Financial Protection after an Accident

While small accidents may end up in a damaged tail light or broken windshield, larger road catastrophes might result in the engine of your car or bike being destroyed.

When this occurs, you cannot just get it repaired at your local mechanic. Such substantial damage is almost always irreversible, leaving you lacking a vehicle. Now, I f your insurance policy IDV is large. You can utilise your insurance company's considerable payout to fund the acquisition of a new car or bike at such periods.

People who reduce their IDV, on the other hand, may need to obtain new car loans in order to finance another vehicle.

2. Monetary Compensation after Theft

Expert drivers frequently make the error of decreasing insurance IDV as they are confident that they will never be engaged in a catastrophic accident. Nevertheless, they fail to consider that their automobiles or motorcycles are just as liable to be robbed as anyone else's.

It is important to note that if you possess a high-end vehicle model, robbery is a serious concern. Furthermore, if you've got an unsecured parking place, the possibility of theft increases. A higher IDV might also help you if your car or bike gets stolen. You can arrange the acquisition of a new car or bike with the claimed cash you get from your insurance provider.

3. Peace of Mind

Aside from monetary aid, plans with strong IDV can also set your mind at ease. Even if your cherished vehicle is engaged in a catastrophic traffic accident or stolen, this substantial claim sum will mitigate your financial loss.

As a result, such insured individuals do not have to worry about unanticipated catastrophes that are beyond their influence. As is obvious, maintaining the IDV near to or higher than the current market valuation of your automobile is the best strategy. If you reduce it any more, the insurance company's reimbursement may not be enough to cover the cost of a replacement bike or car.

Individuals can tailor the Vehicle IDV with Indian insurers. You have two options for changing this value:

A. Raising the IDV value -

If your automobile or motorcycle is damaged beyond restoration, you can opt to receive hefty compensation. To accomplish this, contact your insurance company and request that the insured stated value be increased. Nonetheless, doing so would entail a little rise in your policy's own damage premium rates.

B. Reducing the IDV value -

If the baseline value is too large and you wish to reduce it, you may do so. Consult with your bike insurance provider about making such an adjustment. Nevertheless, doing so will reduce the amount of compensation you are entitled to following the total loss of the car in the issue. The main reason to reduce your basic Insured Declared Value is to reduce your premium prices for your comprehensive bike insurance plan.

Now, instead of choosing the IDV solely on coverage premiums, one can consider his or her financial stability. A slight amount of high premiums can assist you in reaping the most benefits out of your car or bike insurance online policy in the longer term.

IDV as a Valuation Tool

In the context of a Comprehensive Bike Insurance Policy, the notion of Insured Declared Value or IDV comes into play. This is due to the fact that the premium prices for Third-party Bike Insurance policies are set by the insurance authority - IRDAI. Insured Declared Value may be utilised as a proper bike valuation tool for a Comprehensive insurance policy for both brand-new and old bikes.

While buying a comprehensive insurance plan, an Insured Declared Value calculator will give you an estimate of the bike's valuation. It can be beneficial in terms of financial budgeting. You will learn the anticipated payable premium amount for the insurance as well as the money insured in the event of a total loss.

When computing the Insured Declared Value, you should be truthful with the facts. You must also double-check the information, such as the acquisition year, before calculating the IDV. A little error might invalidate the Insured Declared Value computation.

Age of Bike	Depreciation Rate
Less than 6 months	5%
Between 6 months and a year	15%
Between a year and two years	20%
Between two years and three years	30%
Between three years and four years	40%
Between four years and five years	50%

How to Calculate IDV for Two-wheeler Insurance?

It is simple to compute Insured Declared Value for a comprehensive two-wheeler insurance coverage. All you need to do is use a basic formula, get the information for the equation, and compute.

A. For Bikes with Additional Accessories

The Insured Declared Value or IDV= (Bike Cost - Applicable Depreciation Amount) + (Cost of Bike's Externally Fitted Fittings - their Depreciation Value).

B. For Bikes without Additions

Insured Declared Value or IDV = (Bike Cost - Acceptable Depreciation Amount). Take the bike's stated ex-showroom cost (manufacturer's advertised price) as its pricing and use the Depreciation percentage table mentioned above to obtain the facts and compute the Insured Declare Value of your bike.

If you have a zero-depreciation bike insurancecover, you do not need to factor in depreciation while calculating your IDV.

Conclusion

The insured declared value or IDV is the value at which you have declared your bike. This is usually pre-determined before you purchase an insurance policy, and it is this amount or the maximum that an insurance company will pay if your bike were to be stolen or damaged. This value also includes any accessories in your possession as a part of your bike when the policy was issued. This can help you decide what kind of insurance you need since it determines the sum of money that is being collected for your bike insurance over a period of time.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Basic Guide to Understanding Two-Wheeler Insurance Depreciation

Do not commit these mistakes while buying or renewing bike insurance

Know The Impact of IDV On Renewing Bike Insurance

Zero Depreciation Cover in Two-wheeler Insurance

5 Myths about Motorcycle Insurance without Work