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Key Reasons for Having the Correct Insured Declared Value (IDV) During Bike Insurance Renewal or Purchase

By Juhi Walia
20 July 2022, 3:27 PM

Bike insurance protects your wallet from sudden, unpredictable expenses that you may have to incur due to mishaps of or with your two-wheeler. During bike insurance renewal, you will come across the term ‘IDV’, which stands for ‘Insured Declared Value’.

In essence, IDV is the present depreciated market value of your bike. It represents the maximum assured value the insurance company will compensate you if your motorcycle is stolen or meets with an accident resulting in partial or total loss of its components’ usability.

IDV Calculation for Bike Insurance

IDV in bike insurance is calculated on the bike manufacturer’s notified selling price. A depreciation factor is considered based on the bike’s age for deduction of the corresponding amount from the selling price. It is assumed that the bike’s components are subjected to age and usage related wear and tear.

Bike registration costs and road tax are not considered when calculating the IDV. Accessories installed after the bike’s purchase must be evaluated separately by the insurer’s surveyor for IDV adjustment.

The rate of depreciation vis-à-vis the bike’s age is available for ready reference in the table below.

Two-wheeler’s Age RangeDepreciation Rate
6 months or less5%
6 months – <1 year15%
>1 year – <2 years20%
>2 years – <3 years30%
>3 years – <4 years40%
>4 years – <5 years50%
 >5 yearsDecided with mutual consent between owner and insurer after factoring in bike’s serviceable condition, components’ material, and state.

Other factors considered for IDV calculation are:

  • Bike’s model and make: An expensive motorcycle will have a higher IDV
  • Type of fuel used for running the bike
  • Place of bike’s registration: IDV will be different for bikes registered in the metropolitan and rural areas
  • Mileage covered
  • Cubic capacity of the bike

Advantages of Proper IDV Calculation for Bike Insurance

When renewing your bike insurance, a properly calculated IDV spells several benefits. These have been discussed below. 

Premium Value for Bike Insurance Renewal Gets Optimized

The premium paid by you for renewing bike insurance is directly proportional to the IDV. IDV is used for determining the present market value of bikes. Hence, you are not required to pay a premium corresponding to the bike's original purchase price. With each passing year, you will benefit from a reducing insurance renewal premium value.

The ‘Own Damage (OD)’ premium is usually 2%-3% of the IDV and is determined by cubic capacity, the bike's age and other relevant factors. Proper IDV calculation saves you from paying more for OD coverage. 

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

After a Mishap, the Insurer Provides Adequate Compensation 

If you understate the IDV during renewal for lowering the premium

  • You will get significantly reduced compensation that will be inadequate for covering the incurred losses after a mishap
  • You will have to pay an additional sum from your pocket to get repairs done.

The correct IDV is important for

  • Getting the highest reimbursement from the insurer based on the bike’s present value after theft or damage.
  • Saving on the premium paid because even if you deliberately declare a higher IDV during renewal, the insurer will pay only the fair value after factoring in depreciation.
  • Not being legally accused by the insurer of duping the company wilfully.

You can now better appreciate the importance of correct IDV calculation during bike insurance renewal. 

The Insurer Can’t Deny the Reimbursement Claim

If you live in an area where the possibility of your bike sustaining damage is high, the insurer will look for excuses to deny you your rightful bike insurance claim. One such avenue is the IDV. 

If the insurer figures out that the IDV based on which you had paid the premium during bike insurance renewal is not corresponding with the actual IDV based on a pre-set formula, it can decline your compensation claim. 

Hence, it is important to ensure that the IDV value calculation is accurate. 


The importance of proper IDV calculation during bike insurance purchase or renewal is undeniable. You can exercise your right to get the best IDV by negotiating the value with the insurer. IDV has a major role in fetching you the optimum compensation if your bike is stolen or completely damaged. Always make an informed decision to set the right IDV so you won’t have to regret it later.


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1. What is IDV, and how is it beneficial from a bike insurance’s perspective?

IDV stands for Insured Declared Value. It determines the maximum amount your insurer will pay if your bike meets with an accident that calls for repair or replacement of components or if your bike is stolen.

2. What will happen during claim settlement if I understate or overstate the IDV?

Lower IDV will fetch you lesser compensation that will be insufficient for covering all losses. Higher IDV will make your premium higher, but at the time of claim settlement, the insurer will only pay the actual depreciated value. You won’t get a higher compensation based on your declaration. 

3. Can the insurer decline a claim if the IDV value calculation is flawed?

Yes, the insurer can deny you the claim amount. However, in most cases, they will simply pay you a lesser amount due to the wrong IDV, which wouldn't be sufficient to cover your losses.

4. Can I negotiate with the insurer to fix the IDV at the best value?

Yes, you can get in touch with the prospective insurer to set the IDV if you feel that what is quoted does not reflect your bike's actual depreciated market value.

5. What is the formula used for calculating IDV?

IDV is calculated by a complex formula that factors the bike’s age-related depreciation, fuel type, location, claim history, cubic capacity, mileage travelled, make, model etc.

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