What is IDV in Two Wheeler Insurance?
What does IDV in two-wheeler insurance mean and how important is it? IDV full form in insurance is Insured Declared Value and the right IDV is crucial when purchasing two-wheeler insurance. Your two wheeler's IDV influences how much reimbursement you’ll get towards repair/replacement expenses incurred by you.
In other words, IDV meaning in bike insurance is the maximum sum assured fixed by the insurance company, to compensate the policyholder with, in case of theft of his/her two-wheeler or its total loss due to an accident. In layman’s language, IDV in insurance means the current market value of a two-wheeler.
IDV in insurance refers to the maximum claim your insurance company pays off in case the vehicle is broken or damaged. The price reimbursed by the insurer is equal to the market value of the two-wheeler. If the two-wheeler's market value is Rs 50,000 then the insurer will reimburse Rs 50,000 as a maximum amount.
IDV Calculator for Two Wheelers
IDV calculator for two wheelers is one of the most useful and time-saving online calculator tools. IDV is based on the manufacturer’s listed selling price for the two-wheeler proposed for insurance either at the start of the insurance policy or during policy renewal as the case may be, and then adjusted for depreciation (indicated in the table below).With an IDV value calculator, you can determine the market value as well as the right premium amount for your bike insurance policy.Insurance and registration costs are excluded from the IDV. If insurance is required for accessories that are not factory-fitted, the IDV is separately calculated at an extra cost.
Additionally, the IDV calculator for bike also helps in determining the right claim settlement amount in case the bike is damaged or stolen.
Rate of Depreciation on Two Wheelers
|Life of the Two-Wheeler||Depreciation % to Calculate IDV|
|Two-wheeler not more than six months old||5%|
|Over six months old, but less than one year||15%|
|Over one year old, but less than two years||20%|
|Over two years old, but less than three years||30%|
|Over three years old, but less than four years||40%|
|Over four years old, but less than five years||50%|
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Factors Affecting the Insured Declared Value
IDV in bike insurance is determined on the basis of the following factors:
- The age of the bike to be insured
- Bike’s registration date
- City of Registration
- Fuel Type
- Make/model/ Type
- And your bike insurance policy term
IDV Value for Two-Wheeler's Aged Five Years and Above
The age of a two-wheeler is directly proportional to the rate of depreciation calculated – higher the age, higher the rate of depreciation, i.e. older the two-wheeler, lesser the value.
For a two-wheeler that is five years old or more, its depreciated value is computed on the basis of its serviceable condition and the condition of its body parts. In case of different components made of different materials, the IDV value is adjusted accordingly, and the two-wheeler's final IDV is determined as an overall average.
In case of a two-wheeler older than five years or an obsolete model, the final IDV could be determined by a mutual agreement between the insurance company and the policyholder.
Some insurance companies follow the practice of getting surveyors to arrive at the correct IDV in insurance. This leads to an additional cost that the policyholder has to bear.
Significance of IDV in Bike Insurance
As discussed before, vehicle IDV means the amount of compensation the policyholder receives if his/her two-wheeler is either stolen or severely damaged due to an accident. Settling on a rational IDV in bike insurance is, therefore, very important.
It is wise to get IDV closest to the two-wheeler's market value. This ensures that in case of an accident or theft, the owner is compensated fairly and the policyholder doesn’t suffer major losses. Sometimes, insurance companies may offer to bring down the IDV by about 5-10% - this percentage may be chosen by the customer. In general, a lower IDV value means a lower rate of premium and vice-versa.
The insurance company ultimately considers the age of the two-wheeler when a claim is filed. Hence, irrespective of a low or high IDV, the above information must be borne in mind before choosing a two-wheeler insurance policy.
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Consequences of Declaring Wrong IDV
When calculating IDV or the Insured Declared Value, either during first purchase or during policy renewal, the original purchase price of the two-wheeler is not considered. Instead, the current selling price of the two-wheeler’s particular brand and model is taken into consideration.
It is important to ensure that you do not declare an IDV for your two-wheeler lower than its rational market value. If you do so, and then make a total loss claim, you will most likely receive an amount lower than what you should actually be getting, because the declared IDV was lower.
Declaring a lower vehicle IDV to save a small amount on the premium makes no sense at all. Instead, it is wiser to declare the right IDV amount and save a substantial amount in the long run. Declaring the correct IDV value ensures that you get the maximum fair amount if your two-wheeler is stolen or if you make a big claim.
Similarly, declaring a high IDV to be able to claim a higher amount is not recommended either. The same logic is applicable if you think that declaring a high IDV will fetch you a higher amount while selling the two-wheeler. This is because when the bike insurance claim is processed, the two wheeler’s age is considered by the insurance company, before finalizing the claim; the depreciation that is calculated depends on this. You will, therefore, receive a low claim despite the high IDV declared.
It is, therefore, best to ensure that the IDV you declare for your two-wheeler is in sync with its model and age.
Wrapping it Up!
IDV is one of the most crucial factors that determine your two-wheeler insurance premium with the help of bike insurance calculator. A higher IDV attracts a higher rate of premium and vice-versa. It is, therefore, important to maintain a constant IDV when comparing quotes from different insurers, as this helps you choose the right policy for your two-wheeler.
Learning how to choose the right two-wheeler insurance policy with a good IDV also avoids unpleasant surprises when you file an insurance claim for your two-wheeler.