How is IDV Calculated in Two-Wheeler Insurance?

What is IDV in Two-Wheeler Insurance?

The IDV of a two-wheeler is the maximum sum assured that the insurer offers when there is theft or if the bike is declared as a total loss after an accident. In simple words, IDV will be the 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. IDV is one of the most important components of your bike insurance as it directly impacts the premium.

How to Calculate the IDV of your Two-wheeler?

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

To calculate the Insured Declared Value of your two wheeler you can use the following formula:

IDV = (Manufacturer's listed selling price - Depreciation value) + (cost of bike's accessories that are excluded from the listed selling price - their depreciation value)

While calculating the IDV you must note that the cost of two-wheeler insurance and registration are not included in the Insured Declared Value. 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 to insure them as well.

If your two wheeler is older than 5 years, then the IDV of your bike is calculated based on the condition of its parts and its serviceable condition. Sometimes, it is also calculated on the basis of mutual agreement between the insured and the insurer if your bike is older than 5 years or is considered obsolete.

Why is IDV Important?

It is extremely important to calculate the correct IDV for your two wheeler as it is the compensation you will receive in case your bike is stolen or totally damaged beyond repair. It also directly impacts the bike insurance premium and is also prominent in deciding the resale value of your bike.

Even though a higher IDV results in a higher premium, it also implies maximum coverage. Ideally, the IDV of your bike must be equal to the two-wheeler's market value so if there is any theft or damage, you get a compensation accordingly. The IDV is reduced every year considering the depreciation.

How does IDV Affect Two Wheeler Insurance Premium?

The IDV directly affects your bike insurance premium implying that a higher IDV will fetch higher premiums and vice versa. Hence, it is crucial to declare the correct IDV of your bike at the time of the policy renewal. Some of the factors that affect the IDV and your premium include, your bike's make and model, age, depreciation, accessories, etc. In simple words, since your IDV decreases every year, it also reduces your premium. Remember, never set the IDV of your bike higher than its existing IDV as per your previous year policy.