IDV in Bike Insurance

Insured Declared Value or IDV in bike insurance’s meaning is the maximum amount that a policyholder can receive as compensation in case of a total loss or damage to the insured bike. It is determined by various factors such as current market value and depreciation of your bike due to wear and tear.

It is set at a price closer to the current market value and at the time of purchasing your policy or while renewing it. Simply put, the Insured Declared Value of a vehicle is the total amount that you will be able to claim as compensation or reimbursement against the irrevocable damages caused to your insured two-wheeler.

This concept is applicable only to your bike insurance plan’s own-damage segment. This means that it is not applicable to third-party motor insurance plans. So, when you opt for a comprehensive two-wheeler insurance policy, you will have to select an appropriate IDV in order to ensure that you get maximum compensation benefit in case of a mishap in the future.

Now, the premium payable will also be directly proportional to the IDV you choose. Hence, the more IDV you select, the more your premium amount will be. Usually, the premium charged is 2-3% of the total selected IDV value of an insured vehicle.

As mentioned above, the IDV value calculator for bikes will help you understand the total premium payable against your chosen insurance plan. The IDV of a bike will be calculated by taking into account the current selling price of the two-wheeler on the market. From the market price of the bike, the depreciation on the vehicle’s parts is deducted to find out the IDV. The formula to calculate the IDV of a bike is as follows:

IDV (Insured Declared Value) = (Vehicle’s listed market price – depreciation cost) + (cost of the bike accessories – depreciation value of the parts)

Here, even the bike's extra accessories will be considered while calculating the IDV. For instance, if you have installed accessories like body covers, tyre inflators, gears, and so on, their prices will be included in your bike's IDV.

But if you don’t have any extra accessories in your two-wheeler, you can calculate the IDV of your bike yourself with the help of an online bike insurance IDV calculator. The formula for the same is –

IDV (Insured Declared Value) = Manufacturer’s registered cost of the bike – depreciation value

Let us understand this with the help of an example:

Suppose you buy a bike worth ₹1,00,000 and is one year old. Here, the depreciation rate applicable will be 15%. The IDV, in this case, will calculated based on the following formula:

IDV = Invoice Price - Depreciation

The IDV calculation will be as follows:

If you purchase accessories along with the bike, their price after the deduction for the deductible will also be included in the IDV. The IDV in two-wheeler insurance directly impacts your premium and claim amount. Lower IDV reduces the premium but also limits the claim payout.

The IDV value calculator online will take into consideration several aspects. You need to fill in the details accurately in order to find the right IDV in two-wheeler insurance. Here is what you need to provide to calculate accurately:

Type of the Vehicle

The type of the vehicle plays the most crucial role in the IDV estimation. This is because the IDV of two different vehicles will never be the same as their individual prices. So, on the IDV calculator, you will first have to choose the vehicle type.

Location/State

Next, provide the name of the Indian state in which your vehicle has been registered.

Manufacturing Year

Then, fill in the exact year of purchase of the vehicle. This is another very important criterion behind deciding the IDV of your bike. Every year, your bike’s value will depreciate. So, the year of purchase will be used to ascertain the Insured Declared Value of the bike.

Make & Model

Once you have filled in the correct information related to the above steps, you will have to choose the make and model of your bike. In the calculator, you need to provide the name of the original manufacturer along with the correct model of your vehicle.

IDVs are never the same for two different vehicles because the make and model of the vehicles differ from one another. Hence, you need to put the right make and model in the IDV value of the bike calculator.

Variant

Finally, you will have to choose the correct vehicle variant. Every vehicle has different engine features. A bike with a more powerful engine will be priced higher and naturally have a higher IDV. Hence, your mentioned variant will help to determine the IDV, and you will get an accurate estimation for your bike.

Age of the Bike: IDV in two-wheeler insurance is basically the market value of a vehicle. Therefore, the age of your bike is extremely crucial in determining the IDV for it. The older your bike is, the lesser the IDV and vice versa.

Registration Location: Your bike’s registration details play a big role in the evaluation of the IDV. Your registration city or location will be included on the registration certificate. This location of your bike registration has quite an impact on the IDV that you would choose. For example, the IDV of your bike bought and registered in a metro city could be less than that of a tier-II city.

Make & Model of the Bike: The manufacturer’s details and the make and model of your bike will also have an impact on its IDV. For example, the IDV of a TVS Apache will be less than that of a Bullet 350 due to the difference in their make and model.

Accessories and Modifications: Declaring the value of additional accessories like GPS systems or custom exhausts can increase the IDV. Insurers consider these enhancements when calculating the bike’s worth.

Market Conditions: Market demand, resale trends and economic factors can influence the bike’s market value. If your bike model is in demand, its IDV might be higher.

Depreciation of the Bike: The depreciation of the bike will start from the very moment you start riding it. And the depreciation percentage will keep increasing every year. So, this also will have a huge effect on the IDV. Below, you will find out how the bike’s value will depreciate over the years and how much impact it will have on the IDV.

The Insurance Regulatory and Development Authority of India (IRDAI) has fixed a rate table for vehicles that shows their depreciation costs, and it helps in calculating the IDV of the vehicle.

Also Read: Zero Depreciation Bike Insurance

Higher IDV, Higher Premium: The IDV is your bike's market value. Opting for a higher IDV ensures maximum claim coverage but increases premiums. For instance, if you choose an IDV of ₹70,000, the premium will be higher compared to an IDV of ₹50,000.

-Lower IDV, Lower Premium: A reduced IDV in two-wheeler insurance results in lower premiums but compromises claim settlements. In the event of total loss, you might not receive enough for your bike.

-Impact of Depreciation: As your bike ages, its IDV reduces due to depreciation. This naturally lowers the premium amount over time. For example, a three-year-old bike with an IDV of ₹40,000 will have a lower premium than a new bike with an IDV of ₹80,000.

-Balance Between Cost and Coverage: Selecting an optimal IDV is crucial. While a low premium may seem attractive, it can leave you underinsured. Similarly, paying for an inflated IDV may not be cost-effective.

-Pro Tip: Compare IDVs and premiums using our bike insurance premium calculator to select the right balance for your bike's value and your budget.

Here is how choosing the right IDV for your bike is worth it –

Premium Calculation: The IDV, as discussed above, is the market price of your bike. Therefore, it will directly affect the premium payable. Higher IDV attracts higher premiums, while lower IDV reduces the premium and coverage.

Determines Claim Amount: During insurance claims, reimbursements will be paid out on the basis of the value of your bike. Also, the repair costs will be the same. Hence, this becomes one of the essential factors in your bike insurance. Thus, while claiming your bike insurance, you can receive the right compensation amount for the loss of your bike and the claim that you make.

Affects Total Loss and Theft Claims: If your bike is ever stolen or gets damaged beyond repair, the compensation amount that you will receive from the insurer will be exactly equal to your chosen IDV. Hence, while picking the bike insurance IDV, make sure that you choose it based on the bike’s value.

Ensures Transparency: Our accurate IDV calculations ensure trust and transparency, giving you peace of mind regarding your bike’s valuation and coverage.

Provides Flexibility: IDV allows you to customise your policy based on your coverage, budget needs and risk tolerance.

Reflects Market Value: The IDV is calculated based on the bike’s current market value, considering its age and depreciation, ensuring accurate valuation during claims.

Low IDV and Reduced Claims: Opting for a lower IDV decreases your premium but limits the compensation amount during claims, leaving you underinsured.

High IDV and Expensive Premiums: A higher IDV leads to higher premiums, which may not align with the bike’s actual market value, resulting in overpaying for insurance.

Impact on Resale: A lower IDV in bike insurance can affect the bike’s perceived value during resale, reducing the price you can demand.

Inadequate Financial Protection: In case of theft or total loss, a wrong IDV may prevent you from replacing your bike or covering significant expenses.

Claim Rejections: If the IDV set is too unrealistic, the insurer might reject claims due to inconsistencies with market valuations.

Loss of No-Claim Benefits: Incorrect IDV might lead to frequent claims, affecting the no claim bonus you could have accumulated.

TATA AIG's Assistance: TATA AIG helps set the appropriate IDV, ensuring balanced premiums and adequate financial protection for your bike.

Avoid Overestimating IDV: While a high IDV offers better coverage, it significantly raises premium costs. This can result in financial strain without providing proportional benefits during claims.

Avoid Under-Estimating IDV: Declaring a low IDV reduces premiums but leads to low financial coverage in case of theft or total loss. This can leave you underinsured when you need financial support.

Understand Depreciation Rates: Familiarise yourself with standard depreciation rates based on the bike’s age to calculate an appropriate IDV. Older bikes naturally have lower IDV due to higher depreciation.

Consider Your Bike’s Accessories: Ensure you include the value of any accessories or modifications. For instance, adding a premium GPS increases your bike’s value, which should be reflected in the IDV.

Compare Market Prices: Research your bike's resale value in the market to ensure you declare an IDV close to its actual worth.

Review Annually: Reassess your bike insurance IDV during every policy renewal to reflect the current market value and adjust for depreciation or changes.

Consult Your Insurer: Collaborate with your insurer to strike the right balance between affordable premiums and adequate claim settlements.

Carefully selecting the IDV ensures financial security while avoiding overpaying premiums.

IDV value calculator for bikes over 5 years involves considering their depreciated value. For older bikes, we often determine IDV based on:**

Market Valuation: Assessing the bike’s current resale value.

Mutual Agreement: Estimation of IDV based on mutual understanding between the insurer and insured.

Formula: IDV = (Ex-showroom price - Depreciation) + Costs (registration, taxes).

For example, if your bike's ex-showroom price was ₹80,000 and its depreciation is 50%, the IDV would be ₹40,000 plus applicable registration and taxes.

TATA AIG provides precise IDV evaluations for older bikes, ensuring suitable premium prices and two-wheeler insurance claims.

The concept of IDV in two-wheeler insurance plays a pivotal role in determining the value of your bike insurance coverage and premium. Choosing the right IDV ensures that your two-wheeler is neither undervalued nor overinsured. This ensures that an optimal balance between premium affordability and sufficient claim amounts is maintained.

While a higher IDV offers extensive coverage, it also raises the premium, making it essential to evaluate your bike’s current value carefully. TATA AIG’s comprehensive two-wheeler insurance policies are tailored to help you strike this balance effectively.

With transparent IDV calculations, competitive premiums and a host of unique features, such as cashless repair networks, 24/7 claim assistance and a no-claim bonus. We ensure comprehensive protection for your bike and you with a personal accident cover. Choose TATA AIG for a seamless bike insurance renewal and purchase experience that prioritises your peace of mind.