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There are several aspects of an insurance policy that not everyone is well acquainted with, one of which is IDV. The most misunderstood and common term, IDV in Bike Insurance is something that you’ll come across either while renewing or purchasing your bike insurance policy. So, what is it? Why is it beneficial for your bike coverage? We’ll give a clear picture and simplify it for you.
IDV or Insured Declared Value in simple terms refers to the market value of your bike after the depreciation is calculated. It’s the maximum claim that you can receive from your insurance company when your bike is damaged, broken, or lost.
Note: IDV can be attained only under the Comprehensive Bike Insurance Policy.
For you to understand this better, we have an example:
Say you purchase a new bike for Rs 90,000 (excluding the amount of road tax, accessories, etc.). The IDV of your bike at the time you buy will be Rs 90,000 since the bike is new. However, with time as the bike ages, its value starts depreciating along with the IDV. In the next two years, if your bike’s value is for example Rs 45,000, the IDV will also be Rs 45,000.
The depreciation value is calculated as per ‘the sum the manufacturer sets for the value of your bike’ or as per the ‘manufacturer’s specifications’. It’s imperative to understand that the IDV is not calculated according to the value at which you can sell your bike at. For example, someone may be willing to pay Rs, 80,000 for your bike, but the IDV still would stay intact at Rs 45,000.
Age of the Bike
6 months or below
6 months- 1 year
IDV is decided by the policyholder and insurance provider mutually.
5 years and more
Here’s how the IDV for bike insurance is calculated:
The current market value of the bike/ex-showroom rate – the depreciation of parts= IDV.
There are certain costs that are not included in IDV such as insurance cost, registration cost, and road tax. For accessories that have been added later, their IDV will be calculated separately.
It’s important to comprehensively understand IDV because sometimes the insurance providers tend to offer a low premium policy by reducing the IDV. This is simply not an ideal situation because when you wish to claim the insurance in case of damage, loss, or theft, you’ll be receiving a substantially low amount because of a low IDV. The premium and IDV are interrelated and therefore lower the IDV means lower premium and vice versa.
IDV for bike insurance is essential since it not just states your bike’s real value but also ascertains the sum that you’ll be paying for the bike insurance premium. Moreover, it also determines the claim amount that you’ll be receiving in case of loss, theft, or damage. Hence it’s important to make a prudent choice.