Congratulations, you brought your dream bike home! However, don’t forget, it’s time to get bike insurance too. Any motor vehicle in India needs to be insured, it is mandated by the government. So now that this is something you have to do, what are you waiting for? Can’t understand the jargon used for IDV in insurance by insurance companies in their quotations received by you? If that’s what’s frustrating you, you are at the right place. We want to help our readers make the best choice possible when getting insurance. So, let’s dig deeper into figuring out what IDV in insurance of your Bike means, in this post.
You see it on every insurance quotation, and yet you don’t understand what it means. IDV in insurance is the most important component used to calculate your premium. Shouldn’t we be more aware of it?
IDV or Insured Declared Value, is, simply put, the current market price of your bike. It is also one of the most important factors of calculating your bike insurance.
IDV also is the maximum sum insured. Which means that your IDV amount is what your insurance company will pay you in-case your bike is damaged beyond repair or it is stolen. It is therefore safe to assume that IDV is the only guarantee you have in-case something majorly goes wrong with your bike.
The IDV of your bike isn’t constant. Just like with anything else in the world, the older your bike, the lower the market value of it. The IDV of your bike changes with time, mostly on an annual basis. A major chunk of your bike insurance policy is with respect to the IDV. Hence, it is very important for you to understand how it works.
The IDV of your bike is calculated by the insurance company you bought the insurance policy from. But how can they just calculate it? Well, they know how to, obviously! They do it by looking at the current selling price of your bike and calculate depreciation on it.
The depreciation is calculated on the basis of how old your bike is. The depreciation is applied on the ex-showroom price of your two wheeler which does not include registration charges and insurance cost.
The Indian Motor Tariff has set guidelines for calculating IDV in insurance for bikes. It’s as below:
The insurance companies generally use a standardized formula for calculating IDV for bikes. Therefore, most insurance companies in their quotations, will have similar values set for your bike.
Any accessories that you didn’t get retro-fitted by the manufacturer should be added as IDV in insurance policy too. As a totally damaged bike or stolen bike will mean you will lose all your fitted accessories too. Talk to your insurance company to get those included, as well.
It is important to note that the perfect policy comes with the perfect IDV of your bike. IDV is an indication of the maximum amount you can claim in-case of your bike being totally damaged or stolen.
But, if your IDV is lesser, you stand to lose more. Obviously, a high IDV also pushes the insurance premium up for your bike. In the long run, you’d rather pay a little bit more as premium than getting next to nothing when something major happens to your bike. In an ideal scenario, the IDV of your bike should be as close to the depreciation percentages mentioned above.
Some people look at short-term benefits over long-term benefits, and that is not the recommended when getting your bike insured.
It is extremely essential to know how IDV in insurance is calculated. After all, it is one of the most important components of your bike insurance premium. We hope this post helped you in understanding what IDV is and how it is valued and calculated
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