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Impact of IDV on Two-wheeler Insurance Renewal

By Juhi Walia
02 August 2022, 9:55 AM

Insured Declared Value is the current market value of your vehicle, as determined by your insurer. It is the amount up to which the insurance company will compensate you for the damages to your bike owing to accidents or other covered events. However, the impact that IDV has on your insurance policy is not always so straightforward. In short, a higher IDV will usually result in a higher premium, while a lower IDV will usually lead to a lower premium. Also, the IDV changes with time; so, what it may have been while purchasing a policy won't be the same when two-wheeler insurance policy renewal comes. It will likely drop as depreciation takes effect, resulting in a lower premium.

Several factors need to be considered while calculating the IDV of your bike during insurance renewal, and we will discuss each one in the blog below. 

What Is IDV?

IDV is the maximum amount an insurance company pays in case of total loss or theft of your two-wheeler. Based on the listed price of the vehicle, the IDV is calculated after subtracting the depreciation. It can be thought of as a reflection of how much you would get if you sold your two-wheeler right now. So when you renew your motorcycle insurance policy, it is crucial to keep the IDV updated so that you don't end up paying more than what the bike is worth.

How Does IDV Affect Bike Insurance Renewal?

When you renew your bike insurance, the IDV of your bike is one of the main factors that affect the premium amount. The IDV is the current market value of your bike and is calculated based on various factors such as make, model, age, depreciation, etc.

The IDV in bike insurance is bound to decrease with time, and hence it will directly impact your premium amount. It is likely that the two-wheeler insurance renewal premium is lower.

Why Should You Disclose the Correct IDV at the Time of Your Policy Renewal?

Many people do not understand the importance of disclosing the right insured declared value of their vehicle when renewing their two-wheeler insurance policy, and they end up paying more than they should. When you insure a vehicle, the bike insurance company agrees to pay you the IDV in case of theft or total loss. If the right IDV is not disclosed during policy renewal, it might affect your coverage. Many, in a bid to reduce the premium, keep the IDV much less. But getting a much lower compensation when claiming outweighs the benefits of a reduced premium. So, keep the IDV around its market value for adequate coverage against unforeseen events while renewing your two-wheeler insurance policy. In the event of total loss or theft, the bike insurance claim amount is based on the IDV.

So. you should never try to lower your personal liability protection just to save on your premium. You're compromising your personal liability coverage and could wind up paying more in the future.

Factors Considered While Calculating the IDV of a Bike

Two-Wheeler’s Purchase Date

The bike's manufacture date can be ascertained from the vehicle identification number (VIN) or the purchase date mentioned on the two-wheeler's registration certificate. From here, insurers can know how old your bike is and how long it has been since you last renewed your insurance.

The Bike Variant

While the best thing about a bike is that there are different models for people with varying budgets, it also means that bikes have different prices. Some cost a lot more than others, so you might want to consider this when calculating your IDV depending on the variant of a two-wheeler you own. For example, a Royal Enfield costs much more than an Activa.

Make and Model of the Bike

What kind of make and model do you ride? Different makes and models would need to be insured at different price points. If possible, look up what the IDV would cost online before going to the dealership to know what to expect.

Fuel Type

Which helps your bike run? Petrol? Diesel? CNG? Diesel has higher emissions and is dirtier than petrol engines, so diesel engines will generally be cheaper to insure. 

Type of Policy

Another important factor to consider while calculating your IDV is the type of policy you wish to renew. You can get third-party, standalone own damage or comprehensive liability policies. The IDV remains insignificant in the case of a third-party bike insurance policy that covers claims posed on you by the people affected by your bike in an accident. A tribunal hears the case and covers third-party claims. But for both standalone and comprehensive bike insurance, the IDV remains paramount. 

The Bottom Line

In India, millions of two-wheeler owners invest their money in bike insurance every year and spend thousands renewing their policies. It is important to ensure that the coverage they are investing in will protect them if and when the need arises. Hence, understanding the impact of the IDV on a bike insurance policy is vital. We hope this blog has helped you understand the impact of IDV on renewing your two-wheeler insurance policy

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1. Does the IDV of my bike decrease with time?

Yes, it does as a result of depreciation that reduces the market value of a bike over time.

2. Will the claim for IDV vary from the repairable damages' claim value?

Yes, both the claims vary in their own sense. Firstly, IDV is used in case of vehicle damages or losses. Based on the extent of the damage, the insurance company will settle the claim in case of repairable damage. However, the maximum claim settlement amount won't exceed the IDV of the bike.

3. While buying a third-party liability insurance policy, should I consider the IDV?

On a third-party liability insurance policy, the IDV does not apply. 

4. Will I have to change my IDV during my policy renewal?

Due to wear and tear and depreciation, your policy is bound to change. It naturally creates a difference in IDV during renewal.

5. Can I update the IDV after the policy has been purchased?

If you want to change the IDV you have accidentally put incorrectly, you should contact the customer support team. 


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