How IDV is Calculated in Two Wheeler Insurance?

IDV or the Insured Declared value is equal to the sum assured amount that the insured person gets in case your two-wheeler is stolen or declared as a total loss. It is the existing market value of the two-wheeler after deducting the bike registration cost and depreciation value of the two wheeler's parts. Insured Declared Value is derived after the cost of depreciation is deducted from the listing price of the manufacturers along with the cost of accessories minus the depreciation.

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What is Insured Declared Value in Two-Wheeler Insurance?

Insured Declared Value is the maximum sum assured that the motor insurance company offers when there is theft or if the bike is declared as a total loss after an accident. In simple words, IDV will be same as the current market value of your bike or two wheeler. It is the amount that you will receive against total loss of the vehicle.

Calculation of IDV of the Two-wheeler

The IDV of a new two-wheeler is determined on the basis of the two-wheeler manufacturers listed selling price for your two-wheeler. Whereas, at the time of renewal, the depreciation cost of the parts is also taken into consideration.

The calculation of the Insured Declared Value of the two-wheeler is done on the basis of the manufacturer’s listed selling price, which is proposed at the time of policy inception or renewal and is adjusted for depreciation (as mentioned in the table below).

However, the cost of two-wheeler insurance and registration are not included in the Insured Declared Value. And the calculation of the IDV of the two-wheeler’s accessories that are not company fitted is done separately by paying an extra amount if you want insurance for them as well. Enclosed below is the depreciation table:

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Depreciation Schedule of a Two Wheeler

Age of the Vehicle

Depreciation for Fixing IDV of the Two-wheeler ( %)

More than 6 months

5%

More than 6 months and lesser than 1 year

15%

More than 1 year and lesser than 2 years

20%

More than 2 years and lesser than 3 years

30%

More than 3 years and lesser than 4 years

40%

More than 4 years and lesser than 5 years

50%

However, if the two-wheeler is older than five years, then its IDV is determined on the basis of the condition of its parts and its serviceable condition. IDV is adjusted on the basis of the components of different materials, and an overall average is derived to calculate the IDV.

In some cases, the IDV for a two-wheeler, which is older than 5 years or is considered as obsolete may be determined on the basis of mutual agreement between the insured and the insurer.

You may like to Read: No Claim Bonus in Bike Insurance

Importance of Insured Declared Value

It is imperative to rationally settle the IDV of the two-wheeler. It is the amount that you will get as compensation in case the two-wheeler is stolen or it suffers damages beyond repair.

Preferably, it should be equal to the two-wheeler’s market value so if there is any theft or damage, you get compensation accordingly. Some Insurance companies may offer to reduce IDV by about 5 to 10 % that could be selected by the customer.

IDV and Two Wheeler Insurance Premium

Insured Declared Value is one of the most important deciding factors when it comes to two wheeler insurance premium. A higher IDV would attract a higher cost of the premium and vice-versa. So, the next time when you are comparing various quotes from different two-wheeler insurers it is important that you maintain a stable IDV as it will help you choose the right two-wheeler insurance policy.

In a Nutshell

All the above-mentioned factors play a considerable role at the time of buy & renew bike insurance policy. In order to get the right two-wheeler insurance policy, you should be aware of all the details.

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^The renewal of insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for a transaction may vary subject to additional data requirements and operational processes.

^The buying of Insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for transaction may vary subject to additional data requirements and operational processes.

#Savings are based on the comparison between highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*TP price for less than 75 CC two-wheelers. All savings are provided by insurers as per IRDAI-approved insurance plan. Standard T&C apply.

*Rs 538/- per annum is the price for third party motor insurance for two wheelers of not more than 75cc (non-commercial and non-electric)

#Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*₹ 1.5 is the Comprehensive premium for a 2015 TVS XL Super 70cc, MH02(Mumbai) RTO with an IDV of ₹5,895 and NCB at 50%.

*Rs 457/- per annum (1.3/day) is the price for the third-party motor insurance for private electric two-wheelers of not more than 3KW (non-commercial). Premium is payable on an annual basis