Two Wheeler Insurance

Does it Make Sense To Increase Your Bike's Insured Declared Value (IDV)?

By Admin
Mar 24, 2021

Insured Declared Value or Insured Declared Value (IDV) is the most important factor while determining the premium amount for a bike’s Comprehensive cover. Insured Declared Value (Insured Declared Value (IDV)) is the maximum amount that your bike insurance provider will reimburse you in case of theft or complete loss of your bike. But which would be better for you – to increase or decrease the Insured Declared Value (IDV)? As a vehicle owner, you may find yourself confused. But we are here to help you make the right decision!

How the Insured Declared Value or Insured Declared Value (IDV) Affects Your Bike Insurance:

Insured Declared Value (Insured Declared Value (IDV)) is the estimated market value of your bike. This value is determined on the basis of the manufacturer’s current selling price. The depreciation of your vehicle depending on its age is also taken into account while calculating the Insured Declared Value (Insured Declared Value (IDV)).

It is suitable to opt for a policy where the Insured Declared Value (Insured Declared Value (IDV)) of your bike is set closest to the market value. This is the safest bet while buying a two-wheeler insurance cover. Decreasing the Insured Declared Value (IDV) value will result in a lower premium amount but it will also reduce the coverage offered. Remember, as your bike gets older, there is a corresponding decrease in its Insured Declared Value (Insured Declared Value (IDV)).

Let’s understand this with an example.

Rajkumar Arora wants to purchase a Comprehensive cover for his bike. A Comprehensive Cover includes the premium for Third Party as well as Own Damage. The premium amount for Third Party is regulated by IRDAI. However, the premium for Own Damage (OD) cover is calculated as a percentage of Insured Declared Value (IDV).  Apart from the Insured Declared Value (IDV), the insurance provider also takes into account the age and cubic capacity of the vehicle. So it is important to calculate the Insured Declared Value (IDV) to ensure the premium amount is justified.

*PRO-TIP: Remember, the greater the Insured Declared Value (IDV), the higher is the premium and vice versa. 

To avoid a higher premium, you may declare a lower Insured Declared Value (IDV) than the market value for your bike. Although a lower Insured Declared Value (IDV) might help you save on premium amount, it will also imply that you'll be compensated with a lower claim amount in case of any unforeseen events or accidents.

Assuming the claim amount will increase, a few owners declare a higher Insured Declared Value (IDV). This is not a good idea because your Insured Declared Value (IDV) is dependent on the manufacturer’s selling price.

Insured Declared Value (IDV) Calculation 

Your bike’s Insured Declared Value (IDV) is the market valuation at the time of buying the two-wheeler insurance policy. It is the maximum amount you can claim if your two-wheeler is stolen or suffers complete damage. However, with every passing year, your bike will bear a percentage of depreciation. The following table compares the Insured Declared Value (IDV) of a vehicle with its age in years:

Age of the bike (in years)Insured Declared Value (in %)
Up to 6 months95%
6 months - 1 year85%
1 year - 2 years80%
2 years - 3 years70%
3 years - 4 years60%
4 years - 5 years50%

Summary: Insured Declared Value (IDV) is the maximum compensation amount that your insurance provider will agree to pay in case of theft or complete loss of the bike. Comprehensive Cover for bikes with a higher Insured Declared Value (IDV) is charged at a higher premium amount and vice versa. However, it is important to select a plan where the IDV is closest to the market price at the time of buying the two-wheeler insurance policy. Also, remember to consider the depreciation in mind at the time of buying. 

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