Multiple technical jargons such as IDV of the two wheeler can confuse you and hinder your two wheeler insurance buying experience. Find out what IDV really is and how it affects your coverage.
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 two wheeler. In case your two wheeler suffers a total loss in an accident, or is stolen, IDV is the compensation that the insurer will provide to the policyholder.
Calculation of IDV
The IDV of the two wheeler is calculated on the basis of manufacturer’s listed selling price of the two wheeler 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.
The Depreciation schedule of a Two Wheeler is as following:
|Age Of The Vehicle||% Of Depreciation For Fixing IDV of The Two-Wheeler|
|Not exceeding 6 months||5%|
|Exceeding 6 months but not exceeding 1 year||15%|
|Exceeding 1 year but not exceeding 2 years||20%|
|Exceeding 2 years but not exceeding 3 years||30%|
|Exceeding 3 years but not exceeding 4 years||40%|
|Exceeding 4 years but not exceeding 5 years||50%|
However, if for depreciation beyond five years, a two wheeler’s IDV is determined on the basis of its serviceable condition and the state of its body parts. For various components of different materials, the IDV is adjusted accordingly and an overall average determines the two wheeler’s IDV. The IDV for a two wheeler older than 5 years and an obsolete manufacturer's model of a two wheeler may be determined by mutual agreement between the insurer and the insured. Some companies have a practice of referring to surveyors for arriving at IDV, which leads to additional cost borne by the insured.
The Importance of IDV
As IDV is the amount that the policy holder is compensated in case the two wheeler suffers damages beyond repairs or if it is stolen, it's extremely important to settle on a rational value. Ideally, it should be close to the market value of your two wheeler so that in situations of theft or damages, you get compensated accordingly. Insurers may offer to reduce IDV by about 5% to 10% which could be chosen by customer.
IDV and Two Wheeler Insurance Premium
IDV is one of the most important factor which determines your two wheeler insurance premium. A lower IDV would attract a lower rate of premium and vice-versa. Thus, while comparing quotes from different insurers for your two wheeler ensure that you maintain a constant IDV value this will help you choose the right policy.