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Insurance Article

What is IDV and Why is it Significant for Used Two Wheelers?

June 28 2018

The two wheeler should ideally be insured within 6 months to get maximum IDV

For most youngsters, getting their first two wheeler is like the official ticket to adulthood. Be it a fancy motorcycle that your dad gets for you as a graduation gift, or the sporty bike of your dreams that you finally buy after saving up from your salary. Owning a two wheeler is a memorable moment for all.

But, on the flip side, getting your two-wheeler exposes you to a few risks as well. Motorcycles or bikes are most exposed to the risk of road accidents they and face severe damages. Some of the causes are triggered by the driver’s negligence, like over-speeding, breaking traffic rules and signals etc.

Here is where the concept of IDV and the benefits of a comprehensive motor insurance plan come into the picture.

What is Insured Declared Value?

IDV or Insurance Declared Value plays a key role in chalking out the maximum sum assured in case of theft or damage of your two-wheeler. It is the maximum amount of money you are entitled to get if your vehicle is lost, broken down or is damaged beyond repair, within the policy cover period. The premium you pay for your vehicle insurance is directly proportional to the IDV.

How Do We Calculate It?

A very important point to remember here is that IDV is not calculated on the price that you have paid for purchasing the vehicle. Instead, it is calculated considering the market value of the two-wheeler on the commencement of the policy. This value varies largely with time.

Ideally, you should get your vehicle insured within six months of the purchase to get the maximum IDV. The older your vehicle, the lesser will be the IDV and the premium.

Depreciation in IDV Rates

In the terms of Insurance, depreciation is the calculated reduction in the value of an asset that changes with time. This is of utmost importance in the case of used vehicles. Ideally, depreciation is adjusted on the vehicle’s selling price as listed by the manufacturer. If a vehicle is not more than six months old, the deprecation value is 5%.

This goes up periodically and reaches a value of 50% of the market price in 4-5 years. In case the two wheeler is more than five years old, the IDV is calculated by an agreement between the insurance company and the policyholder.

Insuring your two wheeler the right amount of IDV is the first step towards ensuring an infallible financial backup. So, get your ride insured and ride without the fear of any financial roadblocks.

Related Article:

What Happens When You Do Not Buy a Two Wheeler Insurance?
Which is Better: Comprehensive or Third-party Bike Insurance?

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