Purchasing a two-wheeler insurance plan is vital regardless of whether you buy a brand-new or even used two-wheeler for yourself. And because it is so crucial, there are several precautions you should take. The majority of us pay our bike insurance premiums and go on.
But do you know how much money your vehicle is currently worth? Do you know how much money you will get back if your bike is stolen or, even worse, if it is damaged beyond the point where it can be repaired? So, that's why we have the IDV.
Let's break it down and help you grasp everything there is to know about an IDV regarding your bike or two-wheeler insurance.
What Exactly is IDV, and What Does it Mean Regarding Bike Insurance?
IDV is an abbreviation that stands for "Insured Declared Value." To put it another way, it is the value that your two-wheeler possesses in today's market. Depreciation is subtracted from the total before it is used in the calculation. The best bike insurance company will pay the policyholder the total value of the bike if the bike is stolen or damaged beyond repair.
Therefore, when you go for comprehensive bike insurance coverage, you must select an adequate IDV to secure maximum payout in case of a tragedy. Now, the amount of your premium will be directly related to the IDV you choose. So, the higher the IDV you choose, the higher your bike insurance premium will be. Typically, the bike insurance premium payable is 2% to 4% of the entire selected IDV value of the insured vehicle.
How to Calculate the IDV for Your Bike Insurance?
IDV in bike insurance is one of the criteria determining the total premium you will pay to get your bike insured. The clauses that apply to two-wheelers are the same as those that apply to any other vehicle. So, how exactly do you calculate the IDV for the bike?
The following is the formula that is used for calculating IDV:
*IDV = (Original price from the manufacturer - depreciation) + (Accessories not included in the listed price from manufacturer - depreciation), excluding the fees for registration and insurance*
Therefore, while calculating the IDV for your bike, insurance and registration fees are not considered. Any accessories that are not included in this calculation and are not pre-installed on your two-wheeler as part of the basic package.
It is essential to keep the above point in mind when making a claim so there are no misunderstandings and unexpected shocks. However, suppose you feel the need to ensure any non-standard components or accessories. In that case, you are free to do so at an additional expense.
If you plan to buy a brand-new two-wheeler, the IDV will equal 95% of the manufacturer's quoted selling price. Due to the vehicle's age and other variables, IDV decreases over time. You can quickly calculate the IDV in your bike insurance policy using the IDV calculators you can find online. It is one of the most helpful and efficient calculator tools that can be accessed online.
How to Calculate a Bike's IDV Using an Online IDV Calculator?
The IDV calculators that are available online will consider several factors. To get the correct IDV value for the bike, you must fill in the information in an accurate manner. To determine an accurate IDV for a bike, we need to take into account the following factors:
- Vehicle Classification - Vehicle classification is the factor that impacts the IDV calculation most. This is because the individual pricing of two different vehicles and their combined IDV will never be the same. Therefore, the first thing you'll need to do when using the IDV calculator is select the type of bike you drive.
- Year of Purchase - The same year the bike was purchased should be entered next. This is yet another significant factor to consider when determining the IDV of your bike. The worth of your bike will decrease with each passing year. Therefore, the year of purchase will determine the Insured Declared Value of the bike.
- Location or State - Next, please specify the Indian state where the registration for your bike was first issued.
What Will Happen if You Calculate an Incorrect IDV for the Bike?
Declaring an IDV less than the market value will result in a substantial loss, as you will receive a claim amount that is less than what you should receive. You could save some money on the premium by listing a lower IDV, but doing so would be a bad idea in the long run.
Similarly, declaring a bigger IDV is not advised, as you will receive a minor claim if you do so. This is because when your bike insurance policy is being processed, the insurance company looks at how old the two-wheeler is and how much it has lost in value. If you give the exact IDV, you can get the most money from your insurance claim if your bike is stolen or damaged.
From the above, we can observe that the IDV calculator is one of the most critical factors when figuring out how much your two-wheeler insurance will cost. Since a higher IDV means a higher bike insurance premium rate and vice versa. The most straightforward way to find the best third-party bike insurance for your bike and compare rates is to keep your IDV constant.
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