If you have a two-wheeler, you must also have an insurance policy to go along with it. But, do you know what your vehicle’s IDV is? In this page, you will learn everything about your vehicle’s IDV and how it affects your insurance premiums.
What is IDV?
IDV, or Insured Declared Value, is the prime determinant of how much money you claim on expenses incurred while repairing a damaged vehicle. It is basically the maximum sum assured set by the insurer in the event of a theft or loss of a vehicle due to an accident. To put it in simpler terms, IDV is basically the current market value of your vehicle. This means it is the amount you will be paid by the insurer if your bike is stolen or is completely damaged because of an accident.
How is an IDV Calculated?
An IDV of a vehicle is calculated on the basis of a manufacturer’s selling price. In this context, selling price is the amount at which the vehicle is sold at the time of commencement/renewal of the insurance policy and is adjusted for any depreciation. To be clear, any amount you pay for registration or to buy two wheeler insurance is not included in an IDV.
Here is a table that lists out the depreciation schedule of a two-wheeler:
|Time Period||Annual Premium|
|Not older than 6 months||5%|
|Exceeding 6 months, but less than a year||15%|
|Exceeding 1 year, but less than 2 years||20%|
|Exceeding 2 years, but less than 3 years||30%|
|Exceeding 3 years, but less than 4 years||40%|
|Exceeding 4 years, but less than 5 years||50.00%|
What Happens to a Vehicle That is More Than Five Years Old?
In case your vehicle is more than 5 years old or more, its IDV depends mostly on the serviceable condition and the state of its body parts.
Your bike can also have an IDV even if it is an obsolete model. This, however, depends on the agreement you come up with your insurance company.
Why is IDV Important?
A good IDV is highly essential if you don’t want to suffer a massive loss in the event of an accident. Insurers usually try to offer an IDV which is 5% to 10% lesser than the current market value provided the applicant agrees to it. This would considerably bring down the premium payment on the policy.
To sum it up, an insurer will always consider the age and condition of your vehicle before settling on a claim. So, you need to keep in mind the aforementioned points to get the best settlement for yourself.