Reasons Why You Should Focus On IDV In Bike Insurance Cover
Why an insurance premium is set low or high depends on a range of factors. While a No Claim Bonus (NCB) amount can get you a lower premium, getting ‘add-on’ covers or buying Comprehensive two-wheeler insurance over a basic third party cover raises the rate of premium. There are many such nuances of two-wheeler insurance which may leave us mystified.
One of the first insurance related terms to understand is ‘Insured Declared Value‘ or IDV. This is a factor which sets the amount you pay as premium.
Let us understand what exactly IDV is and why it is important for us.
- Insured Declared Value is the maximum amount you receive in compensation from your insurance provider, in case of total loss or damage of your vehicle.
- IDV is calculated as the selling price of your bike (set by manufacturer) minus the depreciation (decrease in market value of bike due to age, wear & tear and obsolescence).
Selling Price – Depreciation= Insured Declared Value
- Basically, it is the current market price of your bike and is calculated by the insurance provider. You can also check the IDV on the websites and mobile apps of the various insurance providers.
- Depreciation of your bike is calculated as per the age and model of your two-wheeler. Higher age and older models equals higher depreciation. Higher the depreciation, lower the IDV.
- Depreciation of two wheelers drops at 5% for bikes not older than 6 months up to 50% for bikes older than 4 years. For a bike older than 5 years, usually a surveyor examines the condition of the bike and its parts for service, material of components and existing damage. The IDV of the bike is calculated as an overall average.
- For an old and obsolete bike, the IDV is decided with an agreement between the insurance provider and customer.
- IDV does not include cost of registration and buying insurance. The IDV for non-factory fitted accessories like GPS systems or anti-theft devices which you install is calculated separately.
- IDV decides the premium you pay at the time of buying or renewing your bike It is based on the age and the current market price of your bike. Lower IDV equals lower premium.
- It is recommended to compare the IDV quotes from various insurance providers and choose a two-wheeler insurance which gives you an IDV closest to the market value of your bike so that you are fairly compensated in case of total damage or loss due to theft etc.
- You must always declare the correct IDV and not a lower value to pay a low premium deliberately. This could harm you at the time of a claim as you will receive a lower value than market price for your bike.
Hence, you should always keep track of the current market price of your bike before buying or renewing your two-wheeler insurance cover and get the fair market value for your bike from your insurance provider.