Popular opinion regarding insurance is that it is complicated. Such perception is probably shaped by usage of insurance terms such as Insured Declared Value (IDV) or IDV calculator. It is difficult to comprehend the meaning of such terms by merely reading them; a further explanation is required. And that is where there is a gap.
Digital-first insurers are trying to bridge this gap by simplifying insurance and explaining the terms in an understandable manner. This article also attempts to do the same so that you come to know about the Insured Declared Value Calculator in bike insurance and are better equipped to make an informed choice.
After reading this article, you will get an overview of the concept of IDV, how to calculate it, and its advantages. The article ends with a Frequently Asked Questions section that covers basic queries concerning IDV and is followed by a quiz. Read ahead to know more about IDV and IDV calculator in bike insurance.
Contents
- What is IDV in Bike Insurance?
- IDV Value Calculator for Two-wheeler Insurance:
- How to Calculate IDV for Two-wheeler Insurance?
- List of the Factors Considered Calculating the IDV of a Bike:
- Relation Between IDV and Two-wheeler Premium:
- Advantages and Disadvantages of High/Low IDV Calculation:
- Importance of IDV Calculator for Bike:
- Crucial Thing to Consider in Mind While Calculating IDV Value for a Bike:
- Difference Between IDV Car and IDV Bike Value Calculator:
- Frequently Asked Questions:
What is IDV in Bike Insurance?
IDV = Insured Declared Value. Let’s look at it from a slightly different angle. For understanding purposes, it can be read as the declared value of the asset that is about to be insured. Its simplest meaning can be the current value of the two-wheeler. Note that it is not the resale value of the bike. This is because you might be able to sell your bike for a much higher value than its current value.
IDV is not related to knowing the resale value of the two-wheeler, its purpose is to calculate the premium and arrive at a sum that the insurance company will pay you in case the insured vehicle faces irreparable damage or is lost due to theft. The technical word for it is Totaled or Total Loss. Note that the concept of IDV comes in the picture in case of a Comprehensive Bike Insurance Plan. It can be used as a bike valuation tool with regard to insurance. It can be used for new and used bike valuation.
IDV Value Calculator for Two-wheeler Insurance:
You need to know the IDV of your bike so that you are aware of the sum assured amount that the insurer will pay you in case of Total Loss. The insurance company needs to know the IDV of your two-wheeler to charge the premium for it. Sometimes, the insurers give you a range of IDV and you have the opportunity to select the IDV from that range.
Calculating IDV for a two-wheeler is not rocket science. It can be done within a minute by visiting the insurance company’s website. For example, you can visit the Acko Website and follow the steps to know the IDV of your bike and go ahead and purchase a Comprehensive Bike Insurance policy for it.
Depreciation Rate Calculator for Bike:
Depreciation is another technical term that plays a huge role in determining the IDV and the payable premium. As a result, it is also crucial from a claim settlement perspective. Here’s an example to understand depreciation. You purchase a bike for INR 50,000. Six months later, what will happen to the bike’s value? Will it increase or decrease? It will decrease. This is because of the wear and tear of an asset due to the passage of time.
There is a difference in the value of a newly purchased bike and the same bike when it is five years old. This is because the value of the bike depreciates over time. Here’s a table that helps to determine the Depreciation Rate of a bike. The two-wheeler depreciation calculator table is as per The Indian Motor Tariff.
| Bike’s Age | Rate of Depreciation |
|---|---|
| Below 6 months old | 5% |
| More than six months up to one year | 15% |
| More than one year up to two years | 20% |
| More than two years up to three years | 30% |
| More than three years up to four years | 40% |
| More than four years up to five years | 50% |
What you can determine from the table is that if your bike’s value was INR 50,000 at the time of purchasing it, it will fall down by 15% and become INR 42,500 after it crosses six-month period till the one-year period. Post that, it will depreciate as per the stated rates.
Now, you might wonder what happens if the bike is more than five years old? In such situations, the value is determined by the insurer and the policyholder on a mutual basis. The insurance company might arrange for a supervisor to look at the bike to determine its value before insuring it.
How to Calculate IDV for Two-wheeler Insurance?
Calculating IDV for a two-wheeler insurance policy is easy. All you have to do is apply a simple formula and source the details to be placed in the formula and calculate.
Here’s the IDV formula for a bike with no additional/externally fitted accessories:
Insured Declared Value = Price of the bike – appropriate depreciation value. |
Consider the listed ex-showroom price (manufacturer’s listed price) of the bike as its price and refer to the above-stated Depreciation Rate table to source the details and calculate the IDV.
Here’s a basic example to illustrate the same.
IDV = INR 50,000 – INR 7,500 (15% depreciation)
Thus, IDV = INR 42,500
Here’s the IDV formula for a bike with additional/externally fitted accessories:
Insured Declared Value = (Price of the bike – appropriate depreciation value) + (Price of vehicle’s externally fitted accessories – their depreciation value) |
Online IDV Calculation Process:
In reality, you do not have to calculate IDV manually. You can simply visit the insurance company’s website for bike valuation online and know your bike’s IDV. Here’s the process to do so.
Step 1: Visit the insurer’s website. For example, (Acko Bike Insurance)
Step 2: Choose your bike model
Step 3: Select purchase year
Step 4: Select current policy status
Step 5: Select the Comprehensive Plan
Step 6: Know the IDV and select it from the given range
List of the Factors Considered Calculating the IDV of a Bike:
The following factors are considered while calculating the IDV of a bike.
1) Two-wheeler’s purchase date
This date is helpful to determine the age of the bike. Age is a crucial factor to determine the Depreciation Rate, which helps to calculate IDV.
2) Make and model of the bike
The value of the bike is majorly dependent on the brand of the vehicle and the model.
3) Variant of the bike
Different variants of the same model from the same brand can vary in cost. Thus, the IDV for such variants can also differ.
4) Type of policy
IDV only matters while purchasing or renewing a Comprehensive Bike Insurance Policy.
5) Fuel type
Whether a bike runs on petrol or is an electric bike can also have an impact on its value.
IDV impacts the bike insurance premium directly. If the IDV is high, the premium will be high. If the IDV is low, the premium will be low. The same logic is applicable for IDV and Sum Insured as IDV is the Sum Insured/Assured in case of Total Loss.
Advantages and Disadvantages of High/Low IDV Calculation:
Digital insurers often present you with the option to determine the bike’s IDV from a given range. Here’s a table that will help you understand the impact of selecting a higher IDV or a lower IDV from the given range.
| IDV Range | Advantages | Disadvantages |
|---|---|---|
| Higher IDV | Sum Assured amount shall be higher in case of theft or Total Loss claims. | You will have to pay a comparatively higher premium. |
| Low IDV | You will have to pay a comparatively lower premium. | Sum Assured amount shall be comparatively lower in case of theft or Total Loss claims. |
Also, read: IRDAI Rules for Bike Insurance Policies
Importance of IDV Calculator for Bike:
An IDV calculator gives you an idea about the bike’s value, which is essential to purchase a Comprehensive Bike Insurance policy. It can prove helpful concerning financial planning. You will come to know the approximate payable premium for the policy and also be aware of the sum assured in case of Total Loss.
Crucial Thing to Consider in Mind While Calculating IDV Value for a Bike:
You should be honest with the information while calculating the IDV. Also, you must cross-check the details such as purchase year and then calculate the IDV. A slight mistake can offset the IDV calculation.
Difference Between IDV Car and IDV Bike Value Calculator:
The basics for calculating the IDV for a bike and a car are the same. The difference while calculating is to select the right vehicle category.
Frequently Asked Questions:
Go through this section for common queries concerning IDV and related concepts.
Yes, increasing a bike’s value is possible. If you add externally fitted accessories to your bike, its value should go up.
Yes, there’s a difference between IDV and other types of claims. IDV comes into play when there is a Total Loss. In the case of repairable damages, the insurance company will settle the claim based on the extent of damage covered by the policy.
No, IDV as a concept is not applicable to Third-party Liability policies.
Considering you are renewing a policy after a year, there is bound to be a change in the two-wheeler’s value during that period. Therefore, you can change the IDV while renewing the policy.
In case you find out that you have mentioned incorrect information regarding IDV and wish to change it post-policy purchase, you can get in touch with the insurance company for it. They will assess your request and if approved, the policy can be changed via the endorsement method.
Quiz Wiz:
Here’s a short quiz on IDV, IDV calculation, and related topics to help you make an informed decision while purchasing bike insurance. This quiz consists of five multiple-choice questions; select the most appropriate option for each question. The answers are mentioned at the end of the quiz in the Answer Key. Are you ready to be the quiz wiz?
Q1) What is the full form of IDV?
a) Insured Damaged Value
b) Insured Declared Value
c) Insured Domestic Value
d) International Driver Value
Q2) In which type of policy does IDV come into play?
a) Third-party Liability Policy
b) Personal Accident Cover
c) Critical Illness Cover
d) Comprehensive Vehicle Insurance Policy
Q3) Depreciation rates to determine IDV are stated as per?
a) Brokers
b) Vehicle dealers
c) Indian Motor Tariff
d) Policyholder
Q4) Higher IDV = Higher ____.
a) Policy duration
b) Premium
c) Agent intervention
d) Add-ons
Q5) IDV calculation of a bike is considered based on?
a) Discount
b) Resale value
c) On-road price
d) Manufacturer’s listed price
Answer Key:
| Question No. | Answer |
|---|---|
| 1 | Option B |
| 2 | Option D |
| 3 | Option C |
| 4 | Option B |
| 5 | Option D |
Related Articles:
- Guide To Buying A Used Bike Out of State
- List of Add-on Covers In Bike Insurance
- Bike/Two-Wheeler Insurance For Superbike or Sports Bike
Read informative Two Wheeler Insurance Articles at Acko.
Read all our insurance & non insurance related articles here.
