How is IDV Value Calculated for Bike Insurance?
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Home / Two-wheeler Insurance / IDV in Bike Insurance
A popular opinion regarding insurance is that it is complicated. Such perception is probably shaped by the usage of insurance terms such as Insured Declared Value (IDV). It is difficult to comprehend the meaning of such terms by merely reading them and hence a further explanation is required. Read ahead to know more about the Insured Declared Value Calculator in bike insurance, so you can make an informed decision while buying insurance for your bike.
What is IDV in Bike Insurance?
Insured Declared Value (IDV) in bike insurance refers to the amount you shall receive from the insurer (ACKO) in case of your bike’s total loss. Total loss is a situation where a bike is damaged so severely that it is irreparable, or the bike gets stolen. The Insured Declared Value also means the bike’s current market cost. It is an approximation and not the resale value. Thus, if you are puzzled by the thought, ‘What is IDV in two-wheeler insurance’, it can be understood as the bike’s sum insured amount.
Importance of IDV
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 your insured vehicle faces irreparable damage or is lost due to theft. The technical word for it is Totaled or Total Loss.
IDV as a Valuation Tool
The concept of IDV comes into the picture in the case of a Comprehensive Bike Insurance Plan. This is because the premium rates in the case of Third-party Bike Insurance are determined by the insurance regulator IRDAI. In a Comprehensive insurance plan, IDV can be used as a bike valuation tool for both new and used bike valuation.
IDV Value Calculator for Two-wheeler Insurance
How to Calculate the IDV of Your Bike?
You need to know the IDV of your bike so that you are aware of the sum assured amount that the insurer (in this case ACKO) will pay you in case of Total Loss. ACKO needs to know the IDV of your two-wheeler to charge the premium for it. Generally, the higher the IDV, the higher the premium. Hence, select the right IDV for your bike. Calculating IDV for a two-wheeler is not rocket science. It can be done within a minute by visiting www.acko.com and following the steps to know the IDV of your bike.
Role of Depreciation in IDV Calculation
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. For example: You purchase a bike for Rs. 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.
Here is the depreciation calculator table 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 Rs. 50,000 at the time of purchasing it, it will fall by 15% and become Rs. 42,500 after it crosses the six-month period till 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 ACKO and the policyholder on a mutual basis. ACKO 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.
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).
Without 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.
Importance of IDV Calculator for Bike
An IDV calculator gives you an idea about the bike’s value while purchasing a Comprehensive Plan. It can prove helpful concerning financial planning. You will come to know the approximate payable premium for the policy and also the sum assured in case of Total Loss.
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.
IDV Calculation Process on ACKO
You do not have to calculate IDV manually. Here is a simple 3-steps process for it.
Step 1
Visit www.acko.com or download the mobile app to get your bike insurance. This process is 100% digital and you don't need to fill any forms while buying bike insurance on ACKO.
Step 2
Answer a few details such as your bike model, purchase year and previous policy details.
Step 3
Select the Comprehensive Plan and the right IDV value. ACKO will suggest the approximate IDV of your bike. However, you may increase or decrease it based on your requirements.
Factors Considered While Calculating the IDV of a Bike
Here is the list of factors that needs to be considered while calculating the IDV of a bike.
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.
Make and Model of the Bike
The value of the bike is majorly dependent on the brand of the vehicle and the model. The more expensive the bike, the higher the IDV.
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.
Type of Policy
Insured Declared Value only matters while purchasing or renewing a Comprehensive Bike Insurance Policy.
Fuel Type
Whether a bike runs on petrol or is an electric bike can also have an impact on its value.
Impact of IDV on the Premium Amount
IDV impacts the bike insurance premium directly. If the IDV is high, the premium will be high and vice-a-versa. ACKO allows you 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.
Here are the advantages and disadvantages of high/low IDV calculation.
| IDV Range | Advantages | Disadvantages |
|---|---|---|
| High 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
Frequently Asked Questions
Commonly asked questions about IDV in bike insurance
Is it possible to increase the IDV of my bike?
Yes, increasing a bike’s value is possible. If you add externally fitted accessories to your bike, its value should go up.
Is there a difference between IDV claim and claim value for repairable damages?
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 reparable damages, the insurance company will settle the claim based on the extent of damage covered by the policy.
Do I need to concern myself with IDV if I am buying a Third-party Liability Insurance policy?
No, IDV as a concept is not applicable to Third-party Liability policies. This is because the premium rates for the bike insurance is defined by the insurance regulator IRDAI based on the cubic capacity of the bike's engine.
Can I change the IDV while renewing my policy?
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 due to many reasons such as depreciation. Therefore, you can change the IDV while renewing the policy.
Is it possible to change the IDV after purchasing 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 our customer support team for it. They will assess your request and if approved, the policy can be changed via the endorsement method.
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