What is Insured Declared Value (IDV) in Bike Insurance?

We are well aware of the fact that bike insurance is mandatory in India and it is must as a financial security in the event of a mishap or accident involving your two-wheeler. There are a number of factors that affect your bike insurance premium. And Insured declared value or IDV is the main component of any bike insurance policy.

Let’s get to the basics because it is important to know the right IDV to get the best policy.

What is Insured Declared Value?

Insurance Declared Value (IDV) is the maximum sum insured, which is provided to the insured in case of any theft or total loss of your vehicle in the event of an accident. In a layman’s language, IDV is the current market value of your vehicle. Also, the premium for your policy is calculated on the basis of the IDV.

The maximum amount of money for your bike that you can claim or get reimbursed in case of damage, total loss (theft or bike stolen) and/or constructive total loss (damage beyond repair) is called Insured Declared Value.

In simple words, this is the maximum amount that an insurance company will pay if you lodge a claim for any loss or damage to your insured bike.

IDV indicates the value of your bike after a particular age as it also changes with time. It decreases with vehicle age because of the depreciation factor.

So, the IDV of a new bike will differ from that of a 3-year-old bike.

How Insured Declared Value (IDV) Is Calculated

By now, you know that IDV has a direct correlation to your two-wheeler insurance policy, so, it is quite important to understand how IDV is calculated.

The Insured Declared Value is calculated based on the Ex-showroom price of the vehicle minus the depreciation.

The table below shows the Ex-showroom price of your two-wheeler considering the depreciation factor.

Depreciation Schedule

Two-Wheeler AgeIDV Percentage
Between 0 – 6 months95% of Ex-showroom
Between 6 months - 1 year85%
Between 1 year - 2 years80%
Between 2 years - 3 years70%
Between 3 years - 4 years60%
Between 4 years - 5 years50%

For depreciation beyond five years, a bike’s IDV is determined based on its serviceable condition and the state of its body parts.

Insured Declared Value Calculation:

Ex-showroom means the cost that your dealer pays to the manufacturer, including tax and/or excise duty of the state government. In short, the registration and insurance costs are not included in the IDV.

Note: The Ex-showroom price is completely different than the On-Road price buyer pays to the dealer. On-road price includes the cost of the vehicle, road tax and registration charges.

Since different showrooms are located in different places in India, the Ex-showroom price each dealer pays to the manufacturer differs. This means different insurance companies may keep different IDV of your bike.

In the simplest form, Insured Declared Value = % of the Ex-showroom price

For example, an Activa 4G in Mumbai which has an Ex-showroom price of Rs. 54,809, after 18 months, its IDV will be 80% of the Ex-showroom price = 0.80 x 54,809 = Rs. 43,847 (approximately).

Choosing The Right Policy Means Choosing The Right IDV

It is important to note that the right policy comes when you chose the right IDV for your two-wheeler. As IDV indicates the maximum amount you can claim in case of loss or damage.

For instance, assume that after just 7 months of your bike purchase, unfortunately, your bike gets stolen, if you have an insurance policy, the insurance company will pay you based on IDV.

Now, if you have selected an insurance based on lowest premium instead of highest IDV don’t you think it would be a loss? You definitely would like to get the best and the maximum amount as reimbursement. Ideally, the IDV should be close to the market value of your bike so that in situations of theft or mishap, you are compensated accordingly.

Important Things To Keep In Mind

  • Choose wisely.
  • Check IDV before you buy
  • Don’t follow the herd: lesser the premium better the policy
  • Understand that your policy runs around IDV

So, the next time someone suggests, “Choose a good IDV” while buying your bike insurance policy, you know why! You would not want to be disappointed while claiming your insurance amount by choosing a wrong IDV for your two-wheeler.

For any queries related to bike insurance, feel free to ask us and we would be happy to assist you.

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