Only you know the value of your bike, the real value. It is your blood and sweat. A thing of pride. The basic third party insurance that the law requires you to buy is just not enough when it comes to your hard earned vehicle. What you need is a comprehensive coverage that will protect it completely; to compensate for any third party damages that you may cause but will also cover your vehicle’s damages.
A comprehensive insurance policy contains two parts: own damage (OD) and third-party. OD is the cover you will receive for damages/loss of your own vehicle (including accidental damages, man-made calamities and natural calamities). Third-party cover takes care of the liability the insured will have to face to compensate for damages to other people. This includes accidental damages which results in the death of a person or serious/permanent injury of a person. This also covers damages to the surrounding property that you have caused. The premium of your bike is calculated by the insurance company using the “Insured Declared Value” (IDV). The third party premium is calculated according to the vehicle category. This is unrelated to the IDV of the vehicle.
Premiums tend to escalate because of the inflation rates. So what can you do to save on your two wheeler insurance premium . One possibility is to buy anti-theft devices and take advantage of a premium discount. If you have been lucky throughout the year and did not meet with any accidents, you will be eligible for no claim bonus benefits. No claim bonus can come in the form of discount in premium rates or additional coverage. One of the common mistakes that customers tend to do is accept unfavorable means. It is important that you know the IDV value of your vehicle because it is the crucial deciding value for the insurance premium of your vehicle.
What do you know about the IDV of your two wheeler? Here is a basic explanation for those who are in the woods about IDV: IDV is the sum insured and is decided upon at the beginning of each policy period of the insured vehicle. IDV is calculated based on the manufacturer’s listed selling price of the model and brand. Then, the standard deprecation rates as per Indian Motor Tariff is then used to come up with the final value of the bike. IDV, in other words, is the maximum amount that your insurance company will pay when you make a claim. This is the maximum that you will be paid if your vehicle has undergone total loss, vehicle is stolen, constructive total loss and/or repair of the vehicle is greater than 75% of IDV. You must keep in mind that the rate of depreciation escalates with the age of the car. That means, if you make a claim for a new car, you will be given the maximum IDV. However, as the vehicle ages, the rate of depreciation keeps increasing. The age of the vehicle is the standard metric which decides the rate of depreciation. Thus the older the vehicle, the less the value. If your two wheeler is more than 4 years old/or is an obsolete model, you cannot expect much from the insurer.
When the IDV is calculated (at first purchase or while you do policy renewal), the price at the time of purchase of the vehicle is not considered but the current selling price of the model and brand is considered. You should be careful not to declare a lower IDV than the rational market value. If you happen to do so, and you happen to make a claim for total loss, the amount you receive will not be what you should be getting since the IDV declared was lower. Further, you can save on the long run if you declare the right amount, and not try to save a little on the premium by declaring a lower IDV. Making sure that you make the right IDV declaration will make sure that you get the maximum amount in the event of your vehicle being stolen or if you make a large claim.
If you think that you can cheat the insurer by simply declaring a high IDV, and thus be able to claim a higher amount, you will be mistaken. The same applies if you think that you will be able to get a high amount while selling the vehicle. This is because when the claim is processed, the age of the vehicle will be considered by the insurer. Thus the depreciation before finalizing the claim will depend on this. Consequently, you will end up receiving a low claim despite of the high IDV that you declared. In conclusion, make sure that when you declare the IDV for your vehicle, it is in sync with the model and age of the vehicle.
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