How IDV Affects at the Time of Bike Insurance Renewal

The Insurance Declared Value is an essential component of a bike insurance policy. IDV is something that will have a direct influence on the cost of your vehicle insurance premium. Basically, it is the maximum sum assured offered by an auto insurance company to the policyholder at the time of claim. It is fixed by the insurer and is equated to the market value of the motor vehicle, which changes at the time of renewal.

Simply put, it is the current market value of your vehicle. In a scenario, where your bike is declared as a total loss, the Insured Declared Value is the compensation that will be provided to you by the insurer.

Insured’s Declared value is evaluated as per the following formula- the manufacturer’s listed selling price subtracted by the amount of depreciation. Also, the insurance and registration cost is deducted while calculating the IDV of a two-wheeler.

And if the accessories are not factory fitted; their calculation is also done separately. All of the factors mentioned above play a considerable role during the bike insurance renewal, and you should be aware of all of them in detail to get the best vehicle insurance quote.

When you place an inquiry for a renewal, you will get different quotes for the same; however, the value may not be worth the vehicle’s current condition is and you may end up getting a much lower amount for the same during the bike insurance renewal.

IDV of a new vehicle is determined on the basis of the listed selling price furnished by the manufacturer for that particular brand and model. Whereas, during policy renewal, the depreciation cost of the parts is also taken into consideration.

What Happens to the Value of Your Vehicle Once It Steps Out of The Showroom?

As soon as you take your bike or vehicle out of the showroom, its prices start to fall. Since the depreciation factor kicks in, it affects the Insured’s Declared Value as well.

The entire value of the car or bike falls down by 5% within the first six months of its purchase. After that, each year the value keeps depreciating, which is something the insurers keep in mind while calculating the IDV during the subsequent bike insurance renewals.

Factors Affecting the IDV of your Bike During Policy Renewal

IDV of a motor vehicle is affected by a number of factors. The IDV of a bike is inversely proportional to its age. It implies that lesser the age of the vehicle, higher will be the IDV.

Simply put, the IDV increases over the time due to the depreciation factor.  Look at the below table to understand the dynamics between the age of a vehicle and its IDV.

Age of the Two-Wheeler

Depreciation in %

>6 months

5

B/w 6 months and 1 year

15

B/w 1 year and 2 years

20

B/w 2 years and 3 years

30

B/w 3 years and 4 years

40

B/w 4 years and 5 years

50


Apart from the age, a vehicle’s make and model also have an impact on its IDV.

Why Should You Disclose the Right IDV During Policy Renewal?

It is essential to disclose the correct IDV as it has a direct impact on the car or two-wheeler insurance premium. Moreover, the claim amount is also settled on the basis of the IDV in case of an accidental damage or vehicle theft.

Do not fall into the trap of reducing the Insured Declared Value to save the cost of the insurance premium.

It is something that can cost you a hefty price in the future. Because during a claim, the Insured declared value is taken into consideration and not the current market value.

Having a low IDV can prove costly to you while filing a theft claim. Ideally, the IDV should be closer to the market value as this will ensure the right compensation in case of theft or total damage to your vehicle.

Also, remember that the IDV of vehicle is more than 5 years old is derived on the basis of mutual agreement between the insurer and the insured.

You may like to Read: What is IDV in two-wheeler insurance?

Things to Remember

Keeping the below-mentioned pointers in mind to carefully assess the IDV of your vehicle-

  • Do not just blindly agree to the IDV set by your insurer during a bike insurance renewal.
  • You would also need to check the premium cost and see if it has been evaluated correctly the basis of the IDV of your vehicle.
  • It is crucial to get the right coverage and you should be satisfied with the IDV as you must have put in your hard-earned money in your bike. Make sure that you negotiate well to get the desired amount.
  • While renewing your bike insurance policy, the premium should be largely determined by the Insured’s Declared Value. If the market value equated to the IDV is very high, then you will end up paying a much higher premium as compared to a vehicle that costs lower.

Some insurance providers also give you the opportunity fix your IDV online and the right chance to get the IDV adjusted is during the bike insurance renewal or car insurance renewal, so ensure you get it done when there is a chance.

In a Nutshell

Ultimately, the IDV plays a very important role, especially during the bike insurance renewal or any motor insurance renewal. Always declare the correct value, otherwise, you may end up paying more. There are various insurers that provide great deals and would be able to advise you about the best possible option. Weigh all the options and then make an informed decision! It will help you save up a lot of money in the future and will help you to get the best value for your vehicle.

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