How Does IDV Affect at the Time of Bike Insurance Renewal?

The Insurance Declared Value (IDV) is an essential factor to calculate the bike insurance premium. An IDV is the maximum payout amount set by the insurer that a policyholder will receive in case of theft or total loss. However, it changes during bike insurance renewal. Let us find out how it affects at the time of bike insurance policy renewal.

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What is an IDV in Bike Insurance?

The Insured Declared Value in bike insurance is the pre-determined amount an insurer pays in case of theft or total loss of your bike.

The formula for calculating an IDV of a two-wheeler-

IDV = (the listed selling price of the bike - depreciated value of the bike) + (MRP of additionally fitted accessories - the depreciated value of the additional accessories)

You may also read- What is IDV in two-wheeler Insurance.

How Does IDV Affect Bike Insurance Renewal?

An IDV is the current market value of the vehicle. The IDV of a bike depends upon several factors, and it is inversely proportional to the bike's age. Here is a list of factors determining the IDV of your vehicle-

Make & model of the bike
Fuel type
Age of the bike
Depreciation

Simply put, the IDV decreases over time due to one of the prominent factors i.e., depreciation. It implies that the lesser the age of the vehicle, the higher will be the IDV.

Look at the below table to understand the dynamics between the age of a vehicle and its IDV-

Age of the Two-wheeler	Depreciation Rate (in percentage)
Less than 6 months	5%
6 months – 1 year	15%
1 year – 2 years	20%
2 years – 3 years	30%
3 years – 4 years	40%
4 years – 5 years	50%

Why Should You Disclose the Right IDV During Policy Renewal?

It is essential to disclose the correct IDV because it directly affects the two-wheeler insurance premium. Ideally, during bike insurance renewal, you should never set an IDV higher than your current IDV. Either you should choose an amount that is lower than the current IDV or it should be equal to your current IDV.

For example, The IDV of your bike was Rs. 81,000 in 2022. While renewing your policy in 2023, you should never set an IDV higher than Rs. 81,000. Thus, always choose the IDV that is lesser than your current IDV or is at par with your current IDV because the depreciation borne by your bike reduces its value.

Remember, your insurer will not pay you a settlement amount more than your set IDV in case of theft or total loss of the two-wheeler. Having a low IDV can prove costly to you while filing a theft or total loss claim.

In addition, the IDV of a more than 5-year-old vehicle is decided on a mutual agreement between the insurer and the insured. In India, some insurers offer you an option to fix your IDV online, and the right chance to get the IDV adjusted is during the bike insurance renewal, so ensure you get it done when there is a chance.

You may also read- What is IDV and NCB in Two-wheeler Insurance.

In a Nutshell

Ultimately, the IDV plays a significant role, especially during the bike insurance renewal. Always declare the correct value; otherwise, you may end up receiving less amount than usual at claim settlement.