IDV Calculation: How IDV is Calculated in Two Wheeler Insurance?

Over time, the value of two-wheelers keeps on reducing due to depreciation. To get the correct amount of claim for its insurance, you should know about its market value. For this, the understanding of Insured Declared Value (IDV) is crucial as it denotes how much compensation you are eligible to receive for your two-wheeler against its repair or replacement expenses. It also means that finding the right IDV while purchasing an insurance policy holds a high significance.

What Is Insured Declared Value (IDV)?

A two-wheeler's Insured Declared Value (IDV) is the amount that the insured individual receives if his or her bike is stolen or totaled. In order to determine the proper claim settlement amount, one needs to take into account both the depreciation amount and the registration cost of the two-wheeler.

How to Calculate Insured Declared Value (IDV) in Bike Insurance?

By subtracting the manufacturers' selling price from the insured declared value, along with the accessories' depreciation costs, the insured declared value is determined. There is an additional charge for the IDV calculation of accessories other than those fitted by the company on a two-wheeler. Calculating the IDV is as follows:

Insured Declared Value = (Company’s listed selling price – depreciation value) + (Cost of bike’s accessories excluded from the listed selling price – depreciation value of accessories).

The depreciation applicable in the calculation is based on the table given below:

However, if the age of the bike is more than 5 years, its IDV is determined on the basis of its serviceable condition and the state 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. Although, in case of old vehicles, the IDV is also determined by mutual agreement between the insurance provider and the insured person. Even some insurance firms call surveyors to reckon the right IDV, which may result in additional cost that has to be borne by the insured.

Factors Determining the Insured Declared Value (IDV)

Some factors affect the Insured Declared Value (IDV) of two-wheeler vehicles, which are as follow:

• Age of bike
• Fuel type
• RTO location
• Make and Model type
• Registration date of bike
• Policy term of bike insurance

Significance of Insured Declared Value (IDV) in Two Wheeler Insurance

Insured Declared Value (IDV) is the maximum amount for which the insurance company is liable to compensate the insured person’s loss, in case of bike theft or total loss of vehicle. The total loss denotes that repair expenses incurred to restore your bike or scooter after an accident or a mishap are quite high in comparison to the value of the two wheeler in the market. In most of the cases, the insurance company writes the bike off as a total loss, if the repair cost is higher than 75% of the Insured Declared Value (IDV).

The IDV of a two wheeler is determined with the formula given by the IRDAI, still, you can get a chance to change it by around 15%. The higher the IDV will be, the higher would be the amount of premium you will have to pay for your insurance policy. However, in case a higher amount of IDV was mutually agreed upon between an insurance company and an insured person, the latter would get a higher amount as compensation in case of a total loss or theft. On this note, you must not unreasonably increase the IDV as due to that you will have to pay an extra premium. On the other hand, you must not also try to lower down the IDV to lessen your premium amount, otherwise, you may not be able to receive enough compensation for any damage or loss you suffered due to a theft or total loss and you will have to pay for an amount for repair expenses. 

Conclusion

Insured Declared Value (IDV) is the market value of your bike as calculated by the insurance company and refers to the maximum payout you will receive in case of an accident or mishap. It is important to understand how the above-mentioned methods can be used to calculate the right IDV. You should also compare quotes from different insurers to find the right policy that suits your budget and requirement in terms of IDV, which is directly proportional to the premium amount of your insurance policy. When purchasing insurance for your two-wheeler, it is best to do it online. That way you can compare different bike insurance companies, the quotes they offer and check their network of cashless garages with just a few clicks. Additionally, you can also renew an existing policy and check your premium amount with the premium calculator. Keep in mind that third party insurance is compulsory and that for coverage on own-damage you will either need a standalone own-damage cover or a comprehensive plan. With these, you can also purchase add-on covers to further strengthen your insurance policy. To read similar articles on bike insurance click here.

Also Read:

Know About IDV and NCB in Two Wheeler Insurance

Best Two Wheeler Insurance Plans in India

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.