Insured Declared Value: How's IDV Calculated for Two Wheeler

Understanding Insured Declared Value (IDV)

Insurance Declared Value (IDV) is the maximum sum insured, which is provided to you in case of any theft or total loss of your vehicle. In 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. It is the maximum amount that an insurance company will pay if you lodge a claim for total loss of your insured bike. IDV decreases as the vehicle ages because of the depreciation factor. The IDV of a new bike will differ from that of a 3-year-old bike.

IDV Calculation

The Insured Declared Value is calculated based on the Ex-showroom price of the vehicle minus the depreciation as per the following table. The vehicle’s registration and insurance costs are not considered while calculating IDV.

0-6

Between 0-6 months

IDV Percentage:
95% of Ex-showroom

6-1

Between 6 months to 1 year

IDV Percentage:
85% of Ex-showroom

1-2

Between 1 year to 2 years

IDV Percentage:
80% of Ex-showroom

2-3

Between 2 years to 3 years

IDV Percentage:
70% of Ex-showroom

3-4

Between 3 years to 4 years

IDV Percentage:
60% of Ex-showroom

4-5

Between 4 years to 5 years

IDV Percentage:
50% of Ex-showroom

Declaring correct IDV

It is better to declare the right IDV while purchasing your bike’s insurance policy. Do not choose a higher than market IDV or lower than market IDV as it will end up disturbing your bike’s insurance premium, and claim amount in case of total loss. Choosing a low IDV might mean you pay low premium but it will affect your claim amount in case of total loss. Similarly, if you choose higher IDV in hope that you will receive handsome compensation on total loss, you are mistaken. Insurance is not meant to make profits, it is a way to minimise financial losses in case of an unfortunate event. Ideally, the IDV should be close to the market value of your bike so that in situations of theft or total loss, you are compensated accordingly.