In India, two-wheelers represent an essential vehicle for daily commutes. These vehicles act as a lifeline for many households and businesses by carrying weekly groceries and short-term inventory. Besides, many individuals prefer bikes for a ride complemented by an adrenaline rush. To safeguard this joyful experience, bike insurance and IDV are closely interlinked terms. As more riders are exploring both Internal Combustion Engine (ICE) and Electric bikes, understanding this aspect becomes more crucial.
To help you with that, we’ll discuss the impact of IDV if you have to make a major claim.
What is IDV in a Bike Insurance Policy?
The IDV stands for Insured Declared Value, which represents the current market value of your two-wheeler. It is the total amount paid to the policyholder by the insurer if the vehicle is declared a total loss or stolen. For most bikes, IDV includes the ex-showroom price minus the applicable depreciation. Some of the main characteristics of IDV include:
- It serves as the basis for your premium calculation for the own damage cover of the policy.
- IDV reduces annually due to the standard depreciation applied to vehicles.
- The value of IDV directly affects your premium.
- The higher the IDV, the higher the premium or vice versa.
How IDV Directly Impacts Your Claim Settlement?
The IDV plays a crucial role in both if you purchase bike Insurance online or offline. Here are a few scenarios that explain the application of IDV:
Total loss or theft: If, in an unfortunate event, your two-wheeler is stolen or is a total loss, the insurer will compensate you with the current IDV of your vehicle minus any deductibles.
Particle Damage: If your bike is involved in an accident and repaired in a network garage, the IDV will act as the upper cap for the repair costs.
Depreciation Rates for IDV Calculation
The IDV is calculated based on your motorcycle’s manufacturer’s listed selling prices minus depreciation. It excludes the registration costs and insurance charges. Some of the primary factors that influence the IDV of bikes include:
- Age of the bike
- Brand, model, and variant
- Accessories fitted to the bike
- Registration year
- Depreciation rates as per regulatory guidelines
Besides, let’s quickly review how year-on-year depreciation is applied to motorcycles:
| Age of Bike | Depreciation Rate |
| Up to 6 months | 5% |
| 6 months – 1 year | 15% |
| 1 – 2 years | 20% |
| 2 – 3 years | 30% |
| 3 – 4 years | 40% |
| 4 – 5 years | 50% |
| More than 5 years | Mutually decided by the policyholder and insurer |
Factors That Can Influence IDV Over Time
While the IDV is set at the time of policy purchase or renewal, it is not a fixed figure. Here are a few factors that influence IDV of two-wheelers:
- Maintenance History
- Market Demand
- Technological Updates (For Electric Bikes)
- Location and Parking Condition
Choose the Right IDV for Your Bike
A right IDV helps you get the complete value of your two-wheeler while maintaining an adequate premium amount. Since the IDV is directly related to ICE and Electric bike insurance policy premiums, it affects both your premiums and policy coverage. Here is how you can choose the most appropriate premium for your vehicle:
- Match the IDV with the bike’s current resale value.
- Add the Zero Depreciation cover to the policy since it provides the full value of parts instead of the depreciation value.
- Include the Return to Invoice cover as it helps you get the claim amount as per the invoice of your vehicle if it is declared as a total loss or stolen.
- Review IDV during every policy renewal.
Insurers like HDFC ERGO provide policyholders options to choose between combining comprehensive cover with zero depreciation and return to invoice cover. Also, they have a vast network of more than 2,000 cashless garages, so that your vehicle gets repaired with minimal downtime.
Final Thoughts
In two-wheeler insurance, the IDV has two functions: coverage cap for repairs and total amount distribution if the vehicle is severely damaged or stolen. By selecting the right IDV value and add-ons, you can ensure that you get the maximum value from your bike. Thus, review policies, identify your vehicle’s market demand and set the right value as per your two-wheeler’s value.
