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All you need to know about IDV in bike insurance

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Insured Declared Value or IDV is an essential factor in motor insurance. It is the maximum amount of compensation you will receive from your insurer if your vehicle is irreparably damaged or lost. The IDV of a vehicle is its present market value minus depreciation. However, remember it is the market value and not the resale cost.

What is IDV in bike insurance?

Simply put, an IDV in bike insurance is the market value of your bike after the deduction of depreciation. It is affected by various variables such as the age, model and accessories of your bike. It plays a critical role in determining the premium amount of your motor insurance policy.

As per the Motor Vehicle Act, all bikes must have at least third-party bike insurance. Therefore, understanding the role of IDV in bike insurance is important in making informed decisions when buying two wheeler insurance. 

Important factors in determining IDV in bike insurance

The IDV of a bike directly affects your motor insurance premium amount. Therefore, you must know the factors affecting the IDV of a bike.

  • Make and model

The make and model of your bike is the most important factor in determining its IDV. The more high-end your bike is the more will be the IDV. 

  • Age of your bike

Note, the older the bike, the higher will be its depreciation. It means its IDV will be lower. 

  • Fuel type

The fuel type of the bike affects the IDV in bike insurance. A battery-powered bike will have a higher IDV than one that runs on petrol. 

  • Location

The area where the bike is registered impacts the IDV in bike insurance. The IDV will be higher if the bike is registered in a metro city instead of a rural area. 

  • Type of insurance

The type of two-wheeler insurance and its terms and conditions affect the IDV of the vehicle.

Impact of IDV on insurance premium

IDV in bike insurance is very important in evaluating the premium of the two-wheeler insurance policy as well as the claim settlement amount. A higher IDV means a higher premium amount.

Hence, you must declare a realistic value of the bike to ensure a smooth and hassle-free claim process. Quoting a lower IDV in the bike insurance to reduce the premium amount will cause you more losses in case your bike is lost or damaged beyond repair. Remember, in such a scenario, you will be compensated less than the actual value of your bike. 

Importance of IDV in bike insurance

The IDV in bike insurance is the most crucial factor. Here’s why.

The IDV in bike insurance helps the insurer determine the market value of the bike, which is the basis for calculating the insurance premium. Declaring a lower IDV during the purchase of two wheeler insurance will lead to a lower premium as well as lower coverage. Hence, it is vital to declare a value that is neither too less nor too high to get the right coverage and make the most out of your two wheeler insurance. 

What happens if you declare a wrong IDV in bike insurance?

Declaring IDV in two-wheeler insurance is important to ensure fair compensation at the time of claim settlement. Yet, many bike owners declare a wrong IDV to either save on premium or to get more than the due claim at the time of claim settlement. But, declaring a wrong IDV can lead to the following consequences:

  • Declaring a lower IDV at the time of policy purchase will reduce the amount of compensation at the time of claim settlement. This will lead to paying out of your pocket. 
  • Alternatively, quoting an IDV amount higher than required will lead to you paying a higher premium unnecessarily. The intent to get a higher limit is also a failed attempt, as the insurance company will have other ways to evaluate the compensation too.

How to increase the IDV in bike insurance?

The IDV in bike insurance is calculated based on the age, condition, model and depreciation amount of the bike at the time of purchase or renewal of two wheeler insurance. The same can be increased or decreased as required. To increase the IDV, you can choose the depreciation as per your preferred schedule and maintain the bike in excellent condition to keep the IDV higher. 

Benefits of increasing IDV in bike insurance

There are many benefits of increasing the Insured Declared Value of a bike. Here are some:

  • In case of theft, purchasing a new bike can be a huge amount to invest out of your pocket. An increased IDV in the bike will help you cover the cost of a new bike with some ease.
  • Similarly, in case of total damage too, the insurer will compensate based on the IDV in two wheeler insurance. Getting a higher amount will help you cover the expenses easily. 

Final word

Now that you understand the IDV and its importance in two wheeler insurance, ensure that you take time to calculate the IDV and declare the right amount at the time of purchase of insurance. This will help you cover the losses comprehensively. 

Whether you are looking for new two wheeler insurance or are set to renew your policy, increasing the IDV in bike insurance will help you claim benefits. The point of purchasing insurance is to secure your vehicle and a higher IDV in bike insurance will help you achieve it.

Disclaimer

The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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