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- How IDV Affects at the Time of Bike Insurance Renewal
How Does IDV Affect 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. Higher IDV leads to higher premiums, however, it keeps on reducing over the years. This decreases the premium during renewal. It also plays a crucial role in claim settlements. Let us find out how it affects the bike insurance premium during renewal.
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)
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-
| Parameter | Description |
| Make and Model | Advanced bike models attract higher premium and IDV |
| Fuel Type | Petrol bikes have a low IDV whereas diesel models will have a higher IDV |
| Age of the Bike | The IDV is lower for older bikes whereas it is higher for new bikes |
| Depreciation | Depreciation directly affects the IDV as with age the depreciation increases and IDV increases |
| Accessories | The cost of additional accessories increases your IDV |
| Location | The location where your bike is registered also affects your IDV |
Simply put, the IDV decreases over time due to depreciation the most. It implies that the lesser the age of the vehicle, the higher will be the IDV. During bike insurance renewal, the IDV highly affects the premium amount. High IDV implies higher premium. The renewal premium keeps on decreasing once the IDV decreases.
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, while buying a bike insurance, you should never set an IDV higher than your existing IDV. Either you should choose an amount that is lower or equal to the current IDV.
For example, the IDV of your bike was ₹81,000 in 2022. While renewing your policy in 2023, you should never set an IDV higher than ₹81,000. Hence, while renewing your bike insurance always choose the IDV lesser than or is at par with your current IDV because the depreciation borne by your bike reduces its value.
You must always aim to set the correct IDV as the insurer will not reimburse you more than your set IDV. Since IDV determines the settlement amount, a low IDV can prove costly to you while filing for a theft or total loss claim.
If your bike is older than 5 years, determining the IDV is tricky and crucial. The IDV is then decided on a mutual agreement between the insurer and the insured. It is decided based on the usage, condition, and market value.
In India, some insurers also 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.
FAQs
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Q. Should we keep the IDV high or low?
Ans: IDV is the maximum amount the insurer pays in case of an unforeseen event. Since IDV directly affects the bike insurance premium, it is advised to choose an IDV that is closest to your bike's current market value. -
Q. What IDV should I choose for my bike?
Ans: The IDV you choose must be calculated based on your bike’s listed price and the age of the bike. The IDV is calculated using the formula mentioned below.
IDV = Manufacturer's Listed Selling Price - Depreciation -
Q. Does IDV matter in bike insurance?
Ans: Yes, IDV is one of the most important factors that directly affects your bike insurance premium. It ensures a fair payout in case of total loss or damage. A higher IDV indicates a higher premium, hence you must choose your IDV carefully. -
Q. Can I increase IDV on renewal?
Ans: Yes, you can increase your IDV during your bike insurance renewal.
Bike insurance companies
Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in
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Read more^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 is the price for the third-party motor insurance for private electric two-wheelers of not more than 3KW (non-commercial).The list of insurers mentioned are arranged according to the alphabetical order of the names of insurers respectively.Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in
