Should you increase the IDV of your two-wheeler insurance policy?


Insurer Declared Value, or IDV, is one of the most important terms in bike insurance. It might sound like something complex but it is simply the current market valuation of your bike. In case of theft, total, or constructive loss of the vehicle, your insurance company will provide you with the IDV of your vehicle as compensation.

 

How is the IDV of my bike calculated?

If your two-wheeler is less than 5 years old, then its IDV is calculated based on its age and the corresponding rate of inflation as stipulated by the Motor Tariff Act.

For instance, if your motorcycle is less than 6 months old, then a 5% depreciation is applicable. This means that the IDV of your bike is 95% of its ex-showroom price.

As your vehicle gets older, its IDV decreases. In fact, once your bike is between 4 and 5 years old, the depreciation applicable is 50%. This means that, after just 4 years, the value of your vehicle will be half of its ex-showroom cost!

After the vehicle crosses 5 years, its IDV is decided based on mutual agreement between the insurance provider and the policyholder.

 



Can I set the IDV of my plan?

Yes, you can set the IDV of your plan! The insurance company will estimate your bike’s IDV based on its age, depreciation & condition. However, you can either accept their valuation or you can increase/decrease the IDV as per your preference. Let’s take a look at what happens if you increase the IDV of your plan.

 

Increased payouts in case of a claim.

That’s right - if you increase the IDV of your plan, you will receive higher compensation in case of a claim. This will help you offset the financial impact of a stolen bike or an accident that leaves your vehicle beyond repair.

 

You have to pay higher premiums.

All good things come at a cost. So, while an increased IDV will bring you higher compensation in case of a claim, it will also invite a heavier price tag! This is because a higher IDV poses a greater risk to the insurance provider. Therefore, to cover your bike with a higher IDV, you have to pay a higher premium.

 


How do I check the IDV of my vehicle?

Well, the easiest way to check the IDV of your vehicle is to use a two wheeler insurance premium calculator. These online tools tell you how much your plan will cost and also denote the IDV of your vehicle. You can alter the IDV as well and the calculator will accordingly update the premium of the plan. This will help you set the right IDV for your bike based on your coverage needs and your financial requirements.

 

So yes, it could be a good thing to increase the IDV of your two-wheeler insurance policy. However, be wary of the premium as well – you need to strike a balance between ideal coverage & affordability. Hope this has been helpful, good luck and ride safe!

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