The first thing people advise you when you plan to purchase a bike insurance policy is, “Choose a good IDV!” Why is so much of a fuss being made over IDV! It is because the IDV determines how much you can redeem on expenses incurred for repairing the vehicle after the damage post an accident.
If you don’t want to be left in a shock while claiming your insurance amount, then learn how choosing a policy with a good IDV serves your purpose.
The Basics of IDV
IDV or Insured Declared Value is the maximum Sum Assured fixed by the insurer that is provided on theft or total loss of two-wheeler in the event of an accident. IDV in a lay man’s language is the current market value of the vehicle. If your bike suffers a total loss in an accident, or is stolen, IDV is the compensation that you will be provided by your insurer.
Calculation of IDV
The IDV of the vehicle is calculated on the basis of manufacturer’s listed selling price of it. This is the amount that was proposed for insurance at the commencement of insurance/renewal and adjusted for depreciation (as per the schedule given below). However, the registration and insurance costs are not included in the IDV. The IDV of the accessories, which are not factory-fitted are calculated separately at an extra cost if insurance is required for them as well.
The Depreciation schedule of a two-wheeler is as follows:
|If it is not older than six months
|Exceeding 6 months, but less than 1 year
|Exceeding 1 years but less than 2 years
|Exceeding 2 years but less than 3 years
|Exceeding 3 years but less than 4 years
|Exceeding 4 years but less than 5 years
What If Your Two Wheeler is 5 Years Old or More than that?
The depreciated value of your two-wheeler that is 5-years-old or beyond depends on the serviceable condition and also the state of its body parts. Hence, the IDV would be calculated accordingly.
Even if your bike is an obsolete model, its IDV will be determined by a mutual agreement between the insurance company and you. Some companies have a practice of referring to surveyors for arriving at IDV, which leads to additional cost that has to be borne by you.
What Makes IDV Important?
It is highly recommended to get IDV, which is close to the market value of the bike, such that the bike owner does not suffer a loss in the event of an accident. Insurers may offer to reduce IDV by about 5% to 10% which could be chosen by customer. A lower IDV would attract a lower rate of premium.
Ultimately, in any case, your insurer will always take note of the age of your vehicle at the time of claim. So, whether you choose a low or high IDV, do keep in the mind the above information before choosing your insurance policy.